A year after BlackRock CEO Larry Fink issued a landmark investors’ letter that stressed climate risk and fossil fuel divestment, the world’s biggest asset manager is being accused of greenwashing in a report that documents US$85 billion the company still holds in the coal sector.
The report by Paris-based Reclaim Finance and Sassenberg, Germany-based Urgewald says BlackRock’s policies to limit coal investment only apply to 17% of the industry, and leave out “passive” investment funds that accounted for $5 trillion out of the $7.8 trillion the mammoth firm had under management when the two NGOs conducted their research.
“One year on, it’s hard to see Larry Fink’s sustainability commitment as anything other than greenwashing,” said Reclaim Finance sustainable investment campaigner Lara Cuvelier. “If he really wants BlackRock to be a climate leader instead of a climate pariah, he needs to start aligning green words with green deeds, and direct BlackRock’s awesome financial power towards a sustainable future. After the hottest year on record, the bare minimum for BlackRock is to get out of coal once and for all.”
“In order to effectively exclude the coal industry, BlackRock should drop all companies that are planning to expand existing or build new coal infrastructure,” said Urgewald finance campaigner Katrin Ganswindt. “At the very least, companies with a coal share of revenue of 20% and a coal share of power production of 20% should be excluded from BlackRock’s portfolios,” and “BlackRock needs to define a concrete phaseout date for all coal investments.”
The company certainly has the means to move faster—yesterday, Reuters reported the BlackRock’s profits rising 20%, while its asset value vaulted to $8.68 trillion. “We begin 2021 well-positioned and intend to keep investing in our business to drive long-term growth and to lead the evolution of the asset management industry,” Fink said in a statement.
But so far, apart from a promise last month to support more investor resolutions on fossil divestment, Reclaim Finance and Urgewald say a share of that success still traces back to coal financing.
“BlackRock’s exclusion of mining companies generating more than 25% of their revenues from coal production is widely incomplete, as it covers only a fraction of the coal industry,” they write. “It allows the asset manager to invest in some of the biggest coal producers in the world such as Adani, or Europe’s biggest CO2 producers RWE and AES. Furthermore, investments in coal companies that have expansion plans, such as Sumitomo or KEPCO, are over $24 billion. Among these, BlackRock supports companies with plans to build new power plants which would increase capacity by 241 GW cumulatively, or over three times Germany’s and Poland’s coal power capacities combined.”
And with index funds and exchange-traded funds (ETFs) left out of the BlackRock policy, “money is flowing without any restriction to the coal sector,” the two groups add, “including to companies that are banned from its active funds such as PGE or Coal India. In addition to the weak coal policy adopted for its active assets, BlackRock’s passive funds are also a threat to decarbonization as long as they are growing without robust exclusion criteria.”
Just as Fink’s 2020 letter was greeted as a momentum-builder for climate action, Reclaim Finance and Urgewald say this year’s missive is an opportunity for the storied CEO to shore up his own credibility. “BlackRock has the chance to start seriously tackling its fossil fuel addiction in the run-up to the crucial COP 26 summit in Glasgow,” they write. “Moving seriously on coal is the first step towards alignment to a 1.5°C scenario,” but “this requires adopting a much more ambitious coal policy” and applying it to all the assets the company manages.