BlackRock holds $85 billion in coal investments despite Larry Fink's focus on climate change, report shows

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BlackRock holds $85 billion in coal investments despite Larry Fink's focus on climate change, report shows
BlackRock was accused of not living up to its pledges on climate changeShannon Stapleton/Reuters
  • BlackRock holds at least $85 billion in investments in coal companies, a year after it announced a focus on climate change, a report showed.
  • BlackRock's policies mean it can invest in firms with less than 25% of revenues coming from coal, while its indexing products make it intertwined with big polluters.
  • The asset manager says it has taken big steps in divesting from polluters, creating ESG funds, and pushing for change at companies.

At least $85 billion of assets managed by BlackRock are invested in coal companies, according to a new report, a year after the world's largest asset manager pledged to dramatically reduce its exposure to polluters.

BlackRock's policies mean it can still invest in firms that make less than 25% of their revenues from coal, such as Glencore, and its indexing products leave it with heavy exposure to the industry, campaign groups Reclaim Finance and Urgewald said in a report published on Wednesday.

It comes a year after Fink said BlackRock would take a range of measures to position the company to help tackle climate change and to benefit from the low-carbon transition. They included "exiting investments that present a high sustainability-related risk, such as thermal coal producers".

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Yet Lara Cuvelier, sustainable investment campaigner at Reclaim Finance, today accused BlackRock of "greenwashing". Cuvelier called on the world's biggest asset manager, which manages around $8 trillion in assets, to do more.

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"It's hard to see Larry Fink's sustainability commitment as anything other than greenwashing," Cuvelier said.

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"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 argues that it has already taken major steps, such as divesting fully from firms that make 25% or more of their revenues from thermal coal.

It also stresses that it offers the widest coverage of environmental, social, and corporate governance funds on the market and is transparent about which companies and sectors its indexes contain.

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However, the report highlighted how BlackRock's climate policies mean it does not have to divest from polluting companies with expansion plans. BlackRock holds $24 billion worth of investments in such companies, including Sumitomo and KEPCO, the report said.

The investment giant's indexes are also not covered by the policy. Index funds track certain markets or other indexes - say the UK's FTSE 100, which is full of miners and energy firms - requiring indexing companies to invest in certain firms that may be big polluters. This means BlackRock can still invest in every coal company in the world through its index products.

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A BlackRock spokesperson said: "Our conviction is that climate risk is investment risk. Among the many initiatives to help our clients navigate this risk, we have both achieved 100% ESG integration in our active strategies.

"Across index strategies, we provide clients choice - through the industry's largest ESG index offering - as well as transparency and engagement.

"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."

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