BlackRock’s coal exclusion policy applies to miners that generate 25% of revenue from the fossil fuel
Environmental NGOs urge investment giant to expand its coal exclusion policy to include bigger portion of coal value chain, noting that current ban applies to just 17 per cent of coal companies
NGOs have accused asset management giant BlackRock of greenwash after publishing findings that suggest the company has $85bn worth of assets invested in coal companies one year on from the firm’s high-profile pledge to exit investments in thermal coal.
A report published this morning by Reclaim Finance and Urgewald argues the world’s largest asset manager continues to play a leading role in supporting the coal sector, despite promises made this time last year by chief executive Larry Fink to put sustainability at the heart of all the investment giant’s decisions and to exit investments that “present a high-sustainability risk”, such as thermal coal producers.
The NGOs have urged BlackRock to fill “gaping holes” in the coal divestment policy introduced last year as part of Fink’s pivot towards more sustainable investment, noting that the current ban applies only to the asset manager’s actively managed portfolio, not the index funds and exchange traded funds (ETFs) that make up two-thirds of the $7.8tr of assets BlackRock has under management. Companies explicitly targeted by the coal exclusion policy are therefore still being supported without restriction through BlackRock’s passive funds, the NGOs warned.
In addition, the campaigners’ analysis calculates the coal ban applies to just 17 per cent of the global coal value chain, due to restrictions being limited to companies that generate more than a quarter of their revenues from coal production. As such, the policy has not stopped the asset manager from actively investing in some of the world’s most carbon-intensive companies, such as Indian conglomerate Adani and energy companies RWE and AES, the NGOs said.
Lara Cuvelier, sustainable investment campaigner at Reclaim Finance, criticised the asset manager for what she described as a failure to follow up its commitment to sustainability with meaningful action, adding that BlackRock should “get out of coal once and for all”.
“One year on, it’s hard to see Larry Fink’s sustainability commitment as anything other than greenwashing,” she said. “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.”
Urgewald finance campaigner Katrin Ganswindt suggested that BlackRock should update its policy to include all companies planning to expand existing or build new coal infrastructure. “At the very least, companies with a coal share of revenue of 20 per cent and a coal share of power production of 20 per cent should be excluded from BlackRock’s portfolios,” she said.
Responding to the allegations, a BlackRock spokesperson emphasised the asset manager had launched a number of initiatives geared at helping clients navigate climate risks over the last year, while also taking steps to boost the transparency and size of environmental, social,and governance (ESG) indices offered to its passive fund clients.
“Our conviction is that climate risk is investment risk,” the spokesperson said. “Among the many initiatives to help our clients navigate this risk, we have both achieved 100 per cent ESG integration in our active strategies and, where we have discretion in these strategies, completed the exclusion of equity and bond holdings in companies generating more than 25 per cent of revenues from thermal coal production. Across index strategies, we provide clients choice – through the industry’s largest ESG index offering – as well as transparency and engagement.”
BlackRock voted against directors in favour of climate resolutions at Uniper, Fortum, CEZ, and PGE last year, the spokesperson pointed out, in keeping with another promise set out by Fink in his 2020 letter to investors. “We ask all companies to disclose how their business model will be compatible with the transition to a low-carbon economy,” they said. “Where we do not see sufficient progress, we take voting action.”
The campaigners, however, continue to argue more ambitious action is needed to clean up BlackRock’s investments and have called on the firm to establish a concrete phase out date for all its coal investments and a timeline for ending its support for oil and gas production companies – measures it emphasised could help phase out fossil fuel production over the coming decade in line with global climate goals.