Blackrock Climate Action 100 (CA100+)

Key Takeaway

BlackRock, the world’s largest asset manager, is significantly influencing the global response to climate change through its active participation in Climate Action 100+ (CA100+). This initiative seeks to engage the world’s largest corporate greenhouse gas emitters in efforts to limit climate change, marking BlackRock’s commitment to sustainable finance.

Summary

• BlackRock is the largest asset manager in the world, with over $10 trillion in assets under management.
• Climate Action 100+ (CA100+) is a global investor-led initiative targeting the largest corporate greenhouse gas emitters.
• BlackRock is a founding member of CA100+ and plays a significant role in this initiative.
• CA100+ involves over 600 investors representing over $68 trillion in assets under management.
• The initiative targets the 100 largest corporate greenhouse gas emitters globally.
• CA100+ focuses on reducing emissions, improving governance, and supporting the low-carbon transition.
• BlackRock’s involvement in CA100+ marks a significant shift towards sustainability in finance.
• Key focus areas include governance, emissions reduction, and enhanced climate-related financial disclosures.
• BlackRock’s CEO, Larry Fink, has emphasized the importance of sustainable investing in his annual letters to CEOs.
• The initiative has seen measurable progress, including improved corporate climate policies.
• Challenges remain, such as ensuring consistent and transparent climate-related financial reporting.
• The collaboration between asset managers, investors, and corporations is crucial for meaningful climate action.
• Future prospects include greater regulatory support and enhanced global collaboration for climate goals.

BlackRock’s Role in Climate Action 100+

BlackRock, with its massive influence in the financial world, plays a crucial role in addressing climate change. As a founding member and active participant in Climate Action 100+ (CA100+), BlackRock is at the forefront of efforts to ensure that the world’s largest greenhouse gas emitters adopt sustainable practices.

Climate Action 100+ was launched in December 2017 as a five-year initiative. It was created by a coalition of over 600 investors, who collectively manage more than $68 trillion in assets. The initiative aims to engage with the world’s largest corporate greenhouse gas emitters to control emissions, improve governance, and strengthen climate-related financial disclosures.

Objectives of Climate Action 100+

The initiative has three primary objectives:

1. Reducing Emissions: Encourage companies to set ambitious emissions reduction targets aligned with the Paris Agreement’s goal of limiting global warming to well below 2°C, preferably to 1.5°C.
2. Improving Governance: Ensure companies enhance climate-related governance, including robust board oversight and transparent disclosure.
3. Supporting Low-Carbon Transition: Push companies to develop plans for a transition to a low-carbon economy, including investments in renewable energy and other climate-friendly technologies.

BlackRock’s Commitment to Sustainability

BlackRock’s commitment to sustainability became more pronounced when its CEO, Larry Fink, began emphasizing the importance of sustainable investing in his annual letters to CEOs. In his 2020 letter, Fink wrote:

“Climate change has become a defining factor in companies’ long-term prospects. We are on the edge of a fundamental reshaping of finance.”

This statement highlighted BlackRock’s acknowledgment of climate change as a significant financial risk and opportunity. Consequently, BlackRock has integrated sustainability into its investment strategy and engaged more actively with companies on their climate policies.

BlackRock’s Strategic Actions in CA100+

Engagement and Voting: BlackRock uses its voting power to influence corporate behavior. It has voted against directors at companies that fail to make sufficient progress on climate-related issues.

Active Dialogues: BlackRock engages in ongoing dialogues with companies to encourage them to adopt better climate policies. These dialogues focus on setting science-based targets and aligning with the Paris Agreement goals.

Investment Strategies: BlackRock has launched a range of investment products that focus on sustainability. These include low-carbon index funds and funds that exclude companies with high carbon footprints.

Impact of CA100+

Corporate Policy Changes: Since joining Climate Action 100+, BlackRock has played a crucial role in driving changes in corporate policies. Companies have started to adopt more ambitious climate targets and improve their governance structures to manage climate risks better.

Improved Disclosures: There has been a significant improvement in climate-related financial disclosures, thanks to the pressure exerted by CA100+ participants, including BlackRock.

Enhanced Investor Awareness: BlackRock’s active participation has also heightened awareness among investors about the importance of considering climate risks in their investment decisions.

Challenges and Limitations

Despite the progress, several challenges remain:

Consistency in Reporting: There is still a lack of consistency in how companies report climate-related financial information. This makes it difficult for investors to compare and assess climate risks accurately.

Scope of Engagement: While CA100+ targets the largest emitters, there are many smaller companies whose emissions also contribute significantly to climate change but are not part of the initiative.

Regulatory Support: Greater regulatory support is needed to ensure that all companies adhere to high standards of climate-related financial reporting.

The Path Forward

To build on the progress made, several steps can be taken:

1. Enhancing Collaboration: Greater collaboration between asset managers, investors, and corporations can drive more meaningful climate action.
2. Strengthening Regulations: Governments and regulators can play a crucial role by enacting policies that mandate robust climate-related financial disclosures.
3. Expanding the Scope: Expanding the scope of initiatives like Climate Action 100+ to include a broader range of companies can amplify the impact.

BlackRock’s involvement in Climate Action 100+ represents a significant shift towards sustainable finance. By leveraging its influence, BlackRock is helping to drive meaningful changes in corporate behavior, which is essential for addressing the global challenge of climate change. As Larry Fink rightly put it:

“Every government, company, and shareholder must confront climate change.”

Tables

Table 1: Key Milestones of Climate Action 100+

Table 2: BlackRock’s Sustainable Investment Products

References

1. BlackRock. (2020). Larry Fink’s 2020 Letter to CEOs. Retrieved from BlackRock.
2. Climate Action 100+. (2023). Annual Progress Report. Retrieved from Climate Action 100+.
3. Financial Times. BlackRock’s push for corporate climate action. Retrieved from FT.
4. Reuters. (2022). BlackRock’s role in Climate Action 100+. Retrieved from Reuters.
5. The Guardian. (2023). Sustainable finance and climate change. Retrieved from The Guardian.

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