BlackRock to Hold Companies and Itself to Higher Standards on Climate Risk

World’s largest asset manager to take tougher stance against corporations that aren’t providing a full accounting of climate change risks

BlackRock Inc. BLK -0.21% said it would take a tougher stance against corporations that aren’t providing a full accounting of environmental risks, part of a slew of moves by the investment giant to show it is doing more to address investment challenges posed by climate change.

Among the moves, BlackRock said it would be increasingly disposed to vote against management and boards if companies don’t disclose climate change risks and plans in line with key industry standards.

BlackRock is also pulling back from thermal coal producers in actively managed debt-and-equity portfolios by mid-2020, a move that will lead to $500 million in sales. It will expand the range of sustainable investment products as well as double to 150 the number of exchange-traded funds that address environmental, social and governance challenges.

BlackRock is the world’s largest asset manager, with about $7 trillion under management. It has risen on the back of index funds that trade on exchanges and through these funds has extended its reach across nearly every company and is part of the retirement accounts of millions of people around the world. The firm also sits at the backbone of Wall Street as its software is used by banks to monitor their risks.

The firm said it is putting the focus on sustainability because the costs of climate change have ramifications on the price of assets and the financial ecosystem.

“Climate change has become a defining factor in companies’ long-term prospects,” BlackRock Chief Executive Laurence Fink said in his annual letter. “The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.”

The letter is a reflection of Mr Fink’s towering influence over companies. But the letter has rankled some rivals who have sometimes grumbled about what they consider to be a moralistic tone.

The rise of index funds transformed three firms into major forces in corporate America and thrust them into the public spotlight. The biggest—

  1. BlackRock,
  2. Vanguard Group and
  3.  State Street Corp.

—hold roughly a fifth of the S&P 500 through funds they run for investors. They can cast critical votes and have the ears of chief executives. How they exercise this power—or choose not too—has ripple effects across markets.

All three have faced questions over their responsibilities as shareholders on behalf of investors in funds they run. In years past, these firms have targeted gender diversity in boardrooms among other issues.

Lately, there has been increased pressure on them to do more on climate change.

BlackRock’s offices around the world have been frequented by activists who blast the firm for being slow to act on green issues. The firm has debated a question internally: how can BlackRock ensure it has public support to operate in the countries where it does business as it continues to grow?

The firm said it would provide more information on data on the carbon footprint and other potentially controversial holdings in its mutual funds. It also said it would disclose more details of its conversations with the companies its funds invest inBlackRock also recently said it had joined Climate Action 100+, the world’s largest group of investors by assets pressuring companies to act on climate change.

The moves come as regulators are scrutinizing ESG funds across the asset-management industry in an attempt to determine whether those claims are at odds with reality.

“Over the next few years, one of the most important questions we will face is the scale and scope of government action on climate change, which will generally define the speed with which we move to a low-carbon economy,” Mr. Fink said in his letter.

He added that “while government must lead the way in this transition, companies and investors also have a meaningful role to play.”

Want to Do Something About Climate Change? Follow the Money

Chase Bank, Wells Fargo, Citibank and Bank of America are the worst offenders.

WASHINGTON — If you asked us why a dozen people sat on the floor next to the A.T.M. in a Chase Bank branch on Friday, waiting for the police to arrest us for this small act of civil disobedience, we would come up with the same answer as the famous robber Willie Sutton: “Because that’s where the money is.”

We don’t want to empty the vaults. Instead, we want people to understand that the money inside the vaults of banks like Chase is driving the climate crisis. Cutting off that flow of cash may be the single quickest step we can take to rein in the fossil fuel industry and slow the rapid warming of the earth.

JPMorgan Chase isn’t the only offender, but it is among the worst. In the last three years, according to data compiled in a recently released “fossil fuel finance report card” by a group of environmental organizations, JPMorgan Chase lent over $195 billion to gas and oil companies.

For comparison,

  • Wells Fargo lent over $151 billion,
  • Citibank lent over $129 billion and
  • Bank of America lent over $106 billion.

Since the Paris climate accord, which 195 countries agreed to in 2015, JPMorgan Chase has been the world’s largest investor in fossil fuels by a 29 percent margin.

This investment sends a message that’s as clear as President Trump’s shameful decision to pull America out of that pact: Short-term profits are more important than the long-term health of the planet.

There are few financial institutions untouched by these climate change-causing investments. Amalgamated BankAspiration and Beneficial State Bank are notable exceptions. Local credit unions rarely have major investments in fossil fuels.

JPMorgan Chase, in contrast, has funded the very worst projects — projects that expand the reach of fossil fuel infrastructure and lock in our dependence on fossil fuels for decades to come.

In Minnesota, for example, the Line 3 pipeline replacement project, financed in part by JPMorgan Chase, adds 337 miles of crude-oil-carrying pipeline across Minnesota.

If approved this year, the pipeline will carry 760,000 barrels of crude oil every day from Canada to terminals on the edge of Lake Superior. This project reroutes and expands existing pipelines so that more crude oil can flow to refineries in Minnesota, Ohio, Illinois, Michigan and Ontario.

Tara Houska, a tribal attorney and member of the Couchiching First Nation Anishinaabe, has demonstrated the impacts on the ground. If built, the Line 3 replacement route will endanger the wild rice crops harvested for at least 500 years by the people native to the upper Midwest. Many Ojibwe nations in the region have opposed the project.

But it’s just as damaging if the oil doesn’t spill. Refined and burned as gasoline or jet fuel, it will spew carbon into the air, raising the temperature of the planet.

The victims of climate change are primarily people who have done little to cause the crisis. A World Health Organization senior scientist, Diarmid Campbell-Lendrum, said in December that climate change is emerging as “potentially the greatest risk to human health in the 21st century.” In the same month, Oxfam reported that cyclones, floods and fires are now displacing three times as many people as wars.

Not all the victims of climate change are humans. An estimated 800 million animals have been killed in the Australian blazes, which came after record heat and drought. Neither of us have met a long-nosed potoroo; the news that Australia’s bush fires have likely driven it and other species to extinction makes the world seem poorer.

There’s nothing abstract about climate change any more. Slowing the pace of climate change is humanity’s great task.

One center of power in our world is political — that’s why young people have been demonstrating outside of parliaments, writing a Green New Deal and registering new voters: in the United States, 2020 will be a fateful year for changing the politics of climate.

But even if the most environmental candidates win, it’s hard to imagine that they’ll be able to move our country at the pace science requires. The Intergovernmental Panel on Climate Change has said that if we want to limit global warming to 2.7 degrees Fahrenheit (1.5 degrees Celsius) above preindustrial temperatures, we will have to halve greenhouse gas emissions by 2030, cutting them to net zero by around 2050 — and Washington is only one capitol.

It makes sense to go after the other center of power, too: the vast financial empire centered in our country. Insurance companies like Liberty Mutual and asset managers like BlackRock have also, through their investments in fossil fuels, enabled climate chaos.

These titans may be too big to pressure. Yet if we could get just one offending bank to move toward divesting from fossil fuels, the ripple effects would be both swift and global.

Imagine an announcement from JPMorgan Chase that it was immediately ending funding for new fossil fuel projects. It would echo around the world in hours, and there would be nothing the Trumps or Putins or Bolsonaros of the world could do to stop it.

We sat in and were arrested at Chase Bank on Friday for nothing smaller than the future of our planet. If you care about the climate, it’s worth moving your accounts away from these offenders. Cut up your credit cards.

If you want to stop climate change, follow the money.

Australia Is Committing Climate Suicide

As record fires rage, the country’s leaders seem intent on sending it to its doom.

Australia today is ground zero for the climate catastrophe. Its glorious

The images of the fires are a cross between “Mad Max” and “On the Beach”: thousands driven onto beaches in a dull orange haze, crowded tableaux of people and animals almost medieval in their strange muteness — half-Bruegel, half-Bosch, ringed by fire, survivors’ faces hidden behind masks and swimming goggles. Day turns to night as smoke extinguishes all light in the horrifying minutes before the red glow announces the imminence of the inferno. Flames leaping 200 feet into the air. Fire tornadoes. Terrified children at the helm of dinghies, piloting away from the flames, refugees in their own country.

The fires have already burned about 14.5 million acres — an area almost as large as West Virginia, more than triple the area destroyed by the 2018 fires in California and six times the size of the 2019 fires in Amazonia. Canberra’s air on New Year’s Day was the most polluted in the world partly because of a plume of fire smoke as wide as Europe.

Scientists estimate that close to half a billion native animals have been killed and fear that some species of animals and plants may have been wiped out completely. Surviving animals are abandoning their young in what is described as mass “starvation events.” At least 18 people are dead and grave fears are held about many more.

All this, and peak fire season is only just beginning.

As I write, a state of emergency has been declared in New South Wales and a state of disaster in Victoria, mass evacuations are taking place, a humanitarian catastrophe is feared, and towns up and down the east coast are surrounded by fires, all transport and most communication links cut, their fate unknown.

An email that the retired engineer Ian Mitchell sent to friends on New Year’s Day from the small northern Victoria community of Gipsy Point speaks for countless Australians at this moment of catastrophe:

“All

we and most of Gipsy Point houses still here as of now. We have 16 people in Gipsy pt.

No power, no phone no chance of anyone arriving for 4 days as all roads blocked. Only satellite email is working We have 2 bigger boats and might be able to get supplies ‘esp fuel at Coota.

We need more able people to defend the town as we are in for bad heat from Friday again. Tucks area will be a problem from today, but trees down on all tracks, and no one to fight it.

We are tired, but ok.

But we are here in 2020!

Love

Us”

The bookstore in the fire-ravaged village of Cobargo, New South Wales, has a new sign outside: “Post-Apocalyptic Fiction has been moved to Current Affairs.

And yet, incredibly, the response of Australia’s leaders to this unprecedented national crisis has been not to defend their country but to defend the coal industry, a big donor to both major parties — as if they were willing the country to its doom. While the fires were exploding in mid-December, the leader of the opposition Labor Party went on a tour of coal mines expressing his unequivocal support for coal exports. The prime minister, the conservative Scott Morrison, went on vacation to Hawaii.

Since 1996 successive conservative Australian governments have successfully fought to subvert international agreements on climate change in defense of the country’s fossil fuel industries. Today, Australia is the world’s largest exporter of both coal and gas. It recently was ranked 57th out of 57 countries on climate-change action.

In no small part Mr. Morrison owes his narrow election victory last year to the coal-mining oligarch Clive Palmer, who formed a puppet party to keep the Labor Party — which had been committed to limited but real climate-change action — out of government. Mr. Palmer’s advertising budget for the campaign was more than double that of the two major parties combined. Mr. Palmer subsequently announced plans to build the biggest coal mine in Australia.

Since Mr. Morrison, an ex-marketing man, was forced to return from his vacation and publicly apologize, he has chosen to spend his time creating feel-good images of himself, posing with cricketers or his family. He is seen far less often at the fires’ front lines, visiting ravaged communities or with survivors. Mr. Morrison has tried to present the fires as catastrophe-as-usual, nothing out of the ordinary.

This posture seems to be a chilling political calculation: With no effective opposition from a Labor Party reeling from its election loss and with media dominated by Rupert Murdoch — 58 percent of daily newspaper circulation — firmly behind his climate denialism, Mr. Morrison appears to hope that he will prevail as long as he doesn’t acknowledge the magnitude of the disaster engulfing Australia.

Mr. Morrison made his name as immigration minister, perfecting the cruelty of a policy that interns refugees in hellish Pacific-island camps, and seems indifferent to human suffering. Now his government has taken a disturbing authoritarian turn, cracking down on unions, civic organizations and journalists. Under legislation pending in Tasmania, and expected to be copied across Australia, environmental protesters now face up to 21 years in jail for demonstrating.

“Australia is a burning nation led by cowards,” wrote the leading broadcaster Hugh Riminton, speaking for many. To which he might have added “idiots,” after Deputy Prime Minister Michael McCormack blamed the fires on exploding horse manure.

Such are those who would open the gates of hell and lead a nation to commit climate suicide.

More than one-third of Australians are estimated to be affected by the fires. By a significant and increasing majority, Australians want action on climate change, and they are now asking questions about the growing gap between the Morrison government’s ideological fantasies and the reality of a dried-out, rapidly heating, burning Australia.

The situation is eerily reminiscent of the Soviet Union in the 1980s, when the ruling apparatchiks were all-powerful but losing the fundamental, moral legitimacy to govern. In Australia today, a political establishment, grown sclerotic and demented on its own fantasies, is facing a monstrous reality which it has neither the ability nor the will to confront.

Mr. Morrison may have a massive propaganda machine in the Murdoch press and no opposition, but his moral authority is bleeding away by the hour. On Thursday, after walking away from a pregnant woman asking for help, he was forced to flee the angry, heckling residents of a burned-out town. A local conservative politician described his own leader’s humiliation as “the welcome he probably deserved.”

As Mikhail Gorbachev, the last Soviet leader, once observed, the collapse of the Soviet Union began with the nuclear disaster at Chernobyl in 1986. In the wake of that catastrophe, “the system as we knew it became untenable,” he wrote in 2006. Could it be that the immense, still-unfolding tragedy of the Australian fires may yet prove to be the Chernobyl of climate crisis?

What the Divestment Movement Doesn’t Understand (w/ Rob West)

Rob West, founder of Thunder Said Energy – an energy consulting firm, understands that the total decarbonization of the energy industry will be fueled by political attitudes around the world over the next few decades. However, West argues that proponents of ESG investing fail to understand that this transition will involve massive investment in fossil fuels and cooperation with villainized oil majors. He explains his framework for total decarbonization of the energy industry by 2050, and highlights the new technologies and investment vehicles that will be necessary to drive the transition. Filmed on October 18, 2019 in New York.