Beautiful Virgin Islands

Friday, Apr 03, 2026

Here's how the world's largest money manager is overhauling its strategy because of climate change

Here's how the world's largest money manager is overhauling its strategy because of climate change

“Climate change has become a defining factor in companies’ long-term prospects,” BlackRock CEO Larry Fink said Tuesday in his annual letter to company executives.

The world’s largest money manager said that it will roll out a number of new product offerings that focus on sustainable investing.

“Clients are now asking us more and more questions about climate change,” Fink said Tuesday on CNBC’s “Squawk Box.”

“As the largest investment firm in the world, it was very clear to me that more and more clients are looking for advice from us,” Fink said. “Probably the most important inference from my observations is I believe we are just beginning a major reallocation of capital.”

BlackRock is overhauling its investing strategy to make sustainability the “new standard for investing,” which will include launching new active and passively-managed funds that focus on socially responsible investing.

In his highly anticipated annual letter to company executives, BlackRock CEO Larry Fink said that a “fundamental reshaping of finance” is underway as issues like climate change “become a defining factor in companies’ long-term prospects.”

Fink argues that sustainable-focused investing strategies make sense not just from a social perspective, but an economic one. Climate change poses a real risk to long-term viability, and companies can no longer afford to ignore these risks.

BlackRock is the world’s largest money manager -at the end of 2019′s third quarter it had nearly $7 trillion in assets under management -which means that the company’s policies have significant reach. But BlackRock’s sheer size is also in some respects limiting. Since the company offers exchange-traded funds that track the S&P 500, for example, it’s difficult to unilaterally sell stocks of companies that engage in activities that might not align with a customer’s values.

This is not the first time Fink has used his annual letter to push for change. In 2018 he said that companies must focus on more than just making money, and in 2019 he argued that companies need to take positions on societal issues.

This time around, his letter feels more immediate, since the company also announced a host of new initiatives, including doubling its exchange traded funds, or ETF’s, that focus on companies’ environmental, social and governance factors, or ESG. The firm is also moving away from thermal coal companies.

“Because sustainable investment options have the potential to offer clients better outcomes, we are making sustainability integral to the way BlackRock manages risk, constructs portfolios, designs products, and engages with companies,” the firm’s global executive committee, which includes Fink, wrote in its letter to clients Tuesday. “We believe that sustainability should be our new standard for investing.”

BlackRock already offers sustainable investing strategies, but its new products are designed to make it even easier for investors to choose socially responsible funds.

“We want to make sustainable investing more accessible to all investors and lower the hurdles for those who want to act,” the letter said.


Sustainable-focused portfolios


BlackRock said that beginning this year, it will offer sustainable versions of its flagship portfolios, with the eventual goal being to make the sustainable option the “flagship” offering.

Instead of optimizing for market cap-weighted exposure, these funds will instead focus on ESG-optimized exposure.

The company also plans to expand its offerings of sustainability-focused passive funds, as well as its impact investing arm. This includes its Global Impact Equity fund, which is set to launch this quarter.

“Clients are now asking us more and more questions about climate change,” Fink said Tuesday on CNBC’s “Squawk Box.”

“As the largest investment firm in the world, it was very clear to me that more and more clients are looking for advice from us,” Fink said. “Probably the most important inference from my observations is I believe we are just beginning a major reallocation of capital.”


Doubling down on ESG


BlackRock said that stocks and other assets are already evaluated through an ESG-lens, but announced that these factors will play a greater role in the decision-making process.

ESG risk will be evaluated “with the same rigor” as “traditional measures such as credit and liquidity risk.” As ESG-focused investing has grown in popularity so, too, have critics of the style, who argue that the inherently subjective nature means there’s little accountability.

BlackRock said that portfolio managers will be accountable for “documenting how those considerations have affected investment decisions,” noting that it’s part of a wider push to be more transparent.

“By the end of 2020, we intend to provide transparent, publicly available data on sustainability characteristics – including data on controversial holdings and carbon footprint – for BlackRock mutual funds,” the firm said.


Removing coal


As part of its stricter ESG strategy, BlackRock said it would move money away from high-risk sectors, including the thermal coal industry.

The company said it’s divesting from companies that generate more than 25% of their revenue from thermal coal production -or coal used for power production -from its actively managed portfolio, which it hopes to complete by the middle of 2020.

This extends to the firm’s alternative business, which BlackRock said will make no future direct investments in companies focused on thermal coal production.


New ETF offerings


To increase accessibility to sustainable products, BlackRock said that it will more than double its ESG-focused ETFs to 150 funds over the next few years.

This includes sustainable versions of the firm’s flagship index products, and there will also be options to screen out specific sectors entirely.

BlackRock also said that it will work with index providers “to promote greater standardization and transparency of sustainability benchmark methodology.”

Enhancing voter engagement
The firm said that it will step up its engagement with company management on sustainability-related factors, and that starting this quarter it will disclose shareholder voting on a quarterly rather than annual basis.

“On key high-profile votes, we will disclose our vote promptly, along with an explanation of our decision,” the management team said, while adding that it will “enhance the disclosure of our company engagements by including in our stewardship annual report the topics we discussed during each engagement with a company.”


Is it enough?


Some argue that BlackRock should have acted earlier, and that the company isn’t doing nearly enough since it continues to own oil and gas stocks, for example. But it’s also a change that could force others to follow suit.

Sunrise Project senior strategist Diana Best noted that BlackRock’s move “instantly raises the bar for competitors such as Vanguard and State Street Global Advisors.” Sunrise Project is a partner of BlackRock’s Big Problem, a website that calls out the firm for its investments in fossil fuels.

Despite the new sustainability-push, Fink made it clear that the firm will continue to buy controversial areas of the market.

“Under any scenario, the energy transition will still take decades. Despite recent rapid advances, the technology does not yet exist to cost-effectively replace many of today’s essential uses of hydrocarbons,” he said. “We need to be mindful of the economic, scientific, social and political realities of the energy transition. Governments and the private sector must work together to pursue a transition that is both fair and just – we cannot leave behind parts of society, or entire countries in developing markets, as we pursue the path to a low-carbon world.”

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Trump’s Strategic Pressure on UK Seen as Push for Stronger Alignment and Fairer Terms
UK Focuses on Trade Finance to Secure Critical Materials for Defence and Energy Sectors
Majority of UK Businesses Hit by Middle East Conflict While Confidence Holds Firm
UK Royal Navy Faces Renewed Scrutiny as Debate Intensifies Over Capability and Readiness
Reform UK Faces Mounting Distractions as Policy Agenda Struggles to Gain Traction
Investigation Launched Into Northern Cyprus IVF Clinics After UK Families Receive Incorrect Sperm
International Meeting Issues Unified Call to Safeguard Navigation Through Strait of Hormuz
Potential Strait of Hormuz Closure Raises Concerns Over UK Food and Medicine Supply Chains
UK Leads Coalition of Over Forty Nations Urging Iran to Reopen Strait of Hormuz
UK Secures Tariff-Free Access for Medicines in Landmark US Pharma Trade Agreement
King Charles III Invited to Address Joint Session of U.S. Congress in Rare Diplomatic Honor
Debate Grows Over Whether Expanded North Sea Drilling Can Reduce UK Energy Bills
UK Faces Heightened Risk of Jet Fuel Shortages, Airline Chief Warns
UK Ends Police Investigations into Lawful Social Media Posts After Review Finds Overreach
Abramovich Moves to Establish Charity for Frozen Chelsea Sale Proceeds Amid UK Dispute
Starmer Reaffirms NATO Commitment While Responding to Trump’s Strategic Critique
UK Aid Reductions Raise Fears of Severe Human Impact Across Parts of Africa
UK Signals Renewed Push for EU Cooperation as Iran Conflict Reshapes Security Landscape
Bank of England Signals Caution as Bailey Advises Markets Against Expecting Rate Hikes
UK to Convene Global Coalition to Restore Shipping Through Strait of Hormuz
Trump Signals Possible NATO Reassessment, Emphasizes Stronger U.S. Strategic Autonomy
Australia Joins British-Led Efforts to Reopen Strait of Hormuz Amid Escalating Tensions
King Charles Plans US State Visit as UK Strengthens Ties with Trump Leadership
UK Regulator Launches Investigation Into Microsoft’s Business Software Practices
Kanye West Set for High-Profile Return to UK Stage at Wireless Festival
Trump Presses Europe to Strengthen Commitment as Iran Conflict Escalates
UK to Deploy Additional Troops to Middle East Amid Rising Regional Tensions
UK Authorities Face Claims of Heavy-Handed Measures in Monitoring Released Pro-Palestine Activists
Trump Calls on UK to Secure Its Own Energy as Iran Conflict Intensifies
Nigel Farage Declines Invitation to UK Conservative Conference Led by Liz Truss
Trump Warns Allies to Take Responsibility as Rift Deepens with UK and France Over Iran Conflict
How Britain’s Prime Minister Controls U.S. Bomber Access in Escalating Iran Conflict
Trump Urges Allies to Secure Their Own Oil Supplies as Hormuz Crisis Disrupts Global Energy
Russia Expels British Diplomat as UK Pushes Back Against Pressure
White House App Faces Scrutiny After Claims of Continuous User Location Tracking
BBC Faces Scrutiny Over Allegations of Paid Content Linked to Saudi Arabia
UK-France Coastal Patrol Agreement Nears Breakdown Amid Migration Pressures
UK Police Detain Pro-Palestine Activist Again Weeks After Bail Release
FTSE 100 Advances as Energy and Mining Shares Gain Amid Middle East Tensions
Eli Lilly Seeks UK Pricing Deal to Unlock Renewed Pharmaceutical Investment
Three Arrested in UK After Massive Cocaine Haul Discovered Hidden in Banana Shipment
UK Fuel Prices Poised for Further Surge Amid Global Energy Pressures
Apple Subsidiary Penalized by UK Authorities for Breach of Moscow Sanctions
Western Allies Intensify Coordinated Sanctions Strategy Against Russia
UK Lawmakers Face Criticism Over Renewed Push for Social Media Restrictions
Starmer Signals UK Crackdown on Addictive Social Media Features
Rising Costs Push One in Five UK Hospitality Businesses to the Brink of Closure
Man Arrested on Suspicion of Attempted Murder After Car Strikes Pedestrians in UK, Injuring Seven
Escalating Conflict Involving Iran Tightens Fiscal Pressures and Highlights UK Economic Vulnerabilities
UK Moves to Confront Russian ‘Shadow Fleet’ Operating in Its Waters
×