There’s a strong whiff of greenwashing in BlackRock CEO Larry Fink’s widely-acclaimed promise to dump his company’s coal investments, with the details in the announcement sidestepping the segments of the global coal industry that produce the most carbon dioxide emissions, Germany’s Urgewald coal phaseout campaign warned this week.
“The fact that the world’s largest asset manager released a coal policy with a concrete date and threshold is a very promising sign,” Urgewald says in a release. “However, the scope of the policy is still far too limited and further steps will need to follow quickly.”
“The biggest flaw in BlackRock’s policy is that it doesn’t address the part of the industry that is the number one source of CO2 emissions: coal plant operators,” said Urgewald Climate and Energy Campaigner Katrin Ganswindt. “As long as coal-based utilities like RWE, PGE, or Adani stay in the portfolio, BlackRock hasn’t finished its sustainability homework.”
In his widely-read and influential annual letter to CEOs earlier this month, Fink promised to pay attention to the climate crisis and avoid companies that “present a high sustainability-related risk” to investors. “Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance,” he wrote. “The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.”
BlackRock elaborated in a more granular letter to clients, explaining that thermal coal “is significantly carbon intensive, becoming less and less economically viable, and highly exposed to regulation because of its environmental impacts. With the acceleration of the global energy transition, we do not believe the long-term economic or investment rationale justifies continued investment in this sector.”
The company said it would end all investments in companies that draw more than 25% of their revenue from coal power by mid-2020, and “closely scrutinize other businesses that are heavily reliant on thermal coal as an input, in order to understand whether they are effectively transitioning away from this reliance.”
But that language leaves out coal-powered utilities, and even gives a pass to mining behemoths that produce less than one-quarter of their revenue from coal, Urgewald notes.
“Huge CO2 emitters like Germany’s RWE won’t be affected, as the over 80 million tons of coal RWE mines each year are burned in the company’s own power stations,” the release states. Moreover, “some of the world’s biggest coal mining companies that produce tens of millions of tons a year—like BHP Billiton or the Russian Ural Mining Metallurgical Company (UMMC)—will also remain in BlackRock’s portfolio. This is due to the fact that these companies also sell other metals and ores, which puts their thermal coal share of revenue below 25%.”
Those gaps mean BlackRock can spin itself green, but still retain its title as the world’s biggest investor in coal plant developers, with more than US$17 billion in coal stocks and bonds. That’s why any effective coal exclusion strategy must push beyond revenue criteria to set “absolute thresholds based on the size of a company’s coal operations,” the release states.
“Size matters, and this is why investors like the Norwegian Government Pension Fund and France’s insurance giant AXA have adopted policies that exclude companies which have either over 20 million tons annual coal production or operate over 10 gigawatts of installed coal-fired capacity,” explained Urgewald Director Heffa Schuecking. “Policies that don’t cover many of the world’s largest coal players just because they have diversified revenue streams, fall short of what is needed.”