BlackRock holds $85bn in coal despite pledge to sell fossil fuel shares.
Loophole means asset manager can hold shares in firms earning less than a quarter of revenues from coal.
BlackRock, the world’s largest asset manager, holds investments worth $85bn in coal companies, a year after it promised to sell most of its shares in producers of the fossil fuel.
A loophole in the asset manager’s policy means it is still allowed to hold shares in companies that earn less than a quarter of their revenues from coal, meaning it has held on to shares or bonds from some of the world’s biggest coalminers and polluters. Those companies included the Indian conglomerate Adani, the UK-listed commodities companies BHP and Glencore, and the German energy company RWE, according to research by Reclaim Finance and Urgewald, two campaign groups.
Coal production is seen as one of the dirtiest ways of generating power, and the Intergovernmental Panel on Climate Change calculated that coal-fired power generation would have to be all but eliminated by 2050 to prevent global heating of more than 1.5°C.
Investors have gradually taken note, and BlackRock’s coal divestment pledge, first made in January 2020, was hailed by activists as a victory. Environmental groups hoped that other asset managers would follow the lead of BlackRock, which managed assets worth $7.8tn (£5.7tn) at the end of September.
The campaigners who carried out the latest research have now called for the CEO of BlackRock, Larry Fink, to divest fully from coal, including from its $24bn in assets in companies planning to expand coal production, such as Japan’s Sumitomo and Korea’s Kepco.
“One year on, it’s hard to see Larry Fink’s sustainability commitment as anything other than greenwashing,” said Lara Cuvelier, a campaigner at Reclaim Finance. “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. After the hottest year on record, the bare minimum for BlackRock is to get out of coal once and for all.”
BlackRock said it has completely divested all companies with more than a quarter of thermal coal revenues from active investment strategies, and that it offers clients the choice of excluding coal in its index products, which track lists of companies such as London’s FTSE 100.
However, in another loophole, where clients do not explicitly choose to exclude coal, BlackRock argues that it is unable to divest. Index products represent more than $5trn of its managed assets.
A BlackRock spokesperson said: “Our conviction is that climate risk is investment risk. We ask all companies to disclose how their business model will be compatible with the transition to a low-carbon economy. Where we do not see sufficient progress, we take voting action.”
BlackRock last year voted against directors at multiple energy companies on climate grounds, mainly because of lack of disclosure of emissions data. Fink promised the company would start to use the voting power of its vast assets in January 2020, a U-turn after previously arguing it would work mainly through engagement with company boards.
13 January 2021