It remains to be seen whether the position of the world's number one asset manager will have a ripple effect on its competitors, including Vanguard.The 11th annual Letter to CEOs from Larry Fink, CEO and Chairman of BlackRock, was published on 15th March 2023 in a departure from the January slot the Letter had been following for the past few years. The strategy announced by Larry Fink will not change BlackRock’s profile overnight, but it is indeed a start to reallocating assets to less carbon-emitting companies. BlackRock will also launch a new impact investment fund and expand the range of funds invested in low-carbon activities. Banks and insurance companies have already started this movement in recent years. The rest of this sum is made up of indexation, which mirrors stock market indices.īlackrock plans to stop investing in companies that derive more than 25% of their income from the production of thermal coal. These assets represent $1.8 trillion of the company’s $6.9 trillion in managed assets. A provision which mainly concerns its active management, that is to say those client for which Blackrock can really choose where to invest. At the same time, BlackRock plans to communicate more frequently on its voting activity, which will make it possible to check whether its commitment is being respected.īlackRock also plans to increase the share of sustainable investments in its portfolios. "Given the preparatory work already accomplished and the increase in investment risks linked to sustainable development, we will be increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures ," they said. The BlackRock executive committee announced that it wants the companies in which it invests to communicate their strategy for reducing global warming below 2☌. Blackrock explained its past votes by stating it was a result of ongoing discussions with company leaders to encourage them to transform and the need to give such companies time to organize. They also announce a new, more engaged voting policy. First, the letters recall BlackRock’s membership in the Climate Action 100+ investor initiative. Letters from Larry Fink and the executive committee seem to respond. They stressed that BlackRock voted against a majority of the climate-friendly resolutions. American NGO Majority Action demonstrated this in a recent study on voting trends during company general meetings. Nevertheless, with more than $6.9 trillion in assets under management, this financial giant holds significant power which it does not always wield. This letter arrives in a context where BlackRock is increasingly recognized for its weak action on climate. “If ten percent of global investors do so – or even five percent – we will witness massive capital shifts,” declared Fink. BlackRock client investors are also worried, and an increasing number are asking to integrate climate risk into their portfolios. According to him, climate change represents a “a much more structural, long-term crisis” than all the economic crises encountered during his 40-year career. “We believe that sustainable investing is the strongest foundation for client portfolios going forward”, wrote Fink. Larry Fink explained why, and the executive committee announced how. Its purpose was to show the will of the American company to transform its practices and make sustainable investment the standard for BlackRock. This year’s letter came with a little surprise as it was accompanied by a second letter written by members of the executive committee. The annual letter by the CEO of BlackRock Larry Fink is an anticipated event for clients of the world's largest asset manager.
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