Today’s call from BlackRock CEO Larry Fink to the world’s largest corporations to swiftly transition their businesses to net-zero emissions by 2050 and disclose how they plan to do it is “welcomed and will influence a growing global movement that is already underway to drive a more just and sustainable economy,” Ceres CEO and President Mindy Lubber said.
“When the largest asset manager in the world calls for a net-zero transition and mandatory climate risk disclosure it is immensely important to the global movement and will bolster more positive momentum for the future we all seek,” added Lubber. “If we are truly going to stabilize the climate and ensure we build back a more equitable and inclusive economy, we need every large investor and company on deck, and the sound policy structures, corporate and investor alignment to bring the wholesale system-wide change we so desperately need.”
Fink also said BlackRock would publish a temperature alignment metric for public equity and private bond funds, and we will be watching closely to ensure this is carried out. This is an important step because providing such metrics effectively will become a new benchmark expectation for the industry allowing investors to differentiate investment products on the basis of explicit temperature alignment goals, Ceres said.
“Climate change is no longer being debated as a systemic financial risk, and net-zero commitments are now expected among the global investment and business community to achieve the goals of the Paris Agreement,” Lubber added. “All investors are increasingly compelled to align their investments with the goal of net-zero and ensure their portfolio companies commit to this same level of bold ambition and to disclose exactly how they plan to do it. Ignoring climate risk will have a significant impact on investment portfolios and a company’s valuation and access to capital.”
Prior to today’s letter from BlackRock, momentum among the largest global asset managers and owners and multinational corporations—and policymakers for a net-zero future had already been building over the last year—driving each other to take action.
In 2020, the number of the world’s largest companies adopting net-zero emissions targets, tripled to 1,500 from the start of the year. At the same time, investors are increasingly joining forces around the globe to support the transition to net zero. The largest investor engagement initiative - Climate Action 100+ - grew to 545 investors with $52 trillion in assets under management calling on the world’s largest emitters to become net-zero businesses. BlackRock joined in January 2020, and State Street Global Advisors, the third largest global asset manager, joined in November. Last month, 30 asset managers with $9 trillion in assets under management supported a net-zero ambition when they launched the Net Zero Asset Managers initiative, commiting to work with companies in their portfolios to reach the 2050 goal.
With the new Biden-Harris administration in place, we now have the backing of the federal government for science-based climate action.
“After four years of not taking the climate crisis seriously, the federal government is starting to take the necessary executive and regulatory actions to safeguard our planet and economy. We have an opportunity right now to bring faster, bolder change. Net-zero commitments are now expected and will be more widely adopted and implemented in the year ahead. We look forward to working with investors, companies, policymakers and regulators to help them do their essential part to get us to a better future.”
While the BlackRock statement is far reaching, more rapid action is needed. The Ceres Roadmap 2030 - a 10-year action plan for sustainable business leadership - calls for a more comprehensive corporate climate strategy that includes achieving net-zero emissions by 2040 with short and medium-term goals and transparent policy engagement alignment with trade associations.
Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. For more information, visit ceres.org and follow @CeresNews. Ceres is a founding partner of Climate Action 100+ and The Investor Agenda and the Net Zero Asset Managers initiative.
KEYWORDS: Finance, BlackRock, BlackRock CEO Larry Fink, CERES