BlackRock CEO says it’s time to tackle climate change — starting with coal


The world's largest asset manager is putting climate change at the center of its Investment Strategy blackrock overseas almost seven trillion dollars in investments the founder and CEO made the announcement in his annual letters to clients and chief executives of the world's largest companies. He said blackrock will exit. Investments that present. Hi Sustainability Related risk. He also said the company would launch new investment products that screen for fossil fuels. I asked Larry Fink about his message to investors who might say. That's all well and good. But you're not maximizing my prophets well in the United States blackrock as a fiduciary has to live under that mandate. That is the Orissa rules in the United States that the number responsibilities maximize return this is one of the reason why the United States is actually behind many places the world that places sustainability much more prominent. We've also made a statement that we believe in a sustainable portfolio will outperform or indeed. We'll maximize your profits over a long period of time. Their real questions about how you define a sustainable portfolio for example you've announce at blackrock will sell out of all companies that get more than a quarter of their sales from thermal coal. That still still leave some of the biggest coal producers in your portfolio because they do a lot of other things too. So tell me about how you made this call well. Coal is a very small component of any investment universe verse. It's a very small fraction. The principal standard most people use as a standard a fifty percent less. We brought that down to twenty five percent less. But let's be clear Cole is it represents a small component of the investible universe. I think the other things that we announced creating more products more indexes that have sustainability is a key characteristic. Because it'd be a lot more important that whether we invest in in coal companies that have twenty-five percent less of the revenues and coal. The key characteristic is making sure that more and more investors use sustainability as a metrics to look at investing and we we will create the tools. We will have the tools to help people guide that climate activists have staged protests outside of Blackhawks headquarters. Members of Congress have urged to do more. Tell us about why you're making this decision. Now we're doing this on behalf of clients. I have not done this with the idea focused on any activist groups or any other voice we are a voice to the investors. Our job is to be speaking on behalf of investors and I wrote this letter not as an environmentalist. I wrote this letter as a capitalist. was there one event or conversation or news story that really flipped the switch for you that made you think this is a moment. We have to fundamentally changed course now is really the sum some of all my conversations in every part of the world with our clients and witnessing their questions about this and it really became very clear to me as somebody somebody embiid and finance for forty four years. Very clear to me that we're at a point. Now where more and more people believe in the science of climate change more and more people are worried about their portfolios and how their portfolio is going to be performing over a ten year horizon some cities that have consistent problems related to flooding or fires. Those cities are GonNa have a harder time financing their debt over a long horizon. I raise a question about the role of a thirty year mortgage in areas where climate change could have a serious impact over time. Would you adequately issue a thirty year mortgage if you can't get proper private flood or fire insurance and so this is how we believe. We're seeing capital changing changing. If more and more people believe that climate change is going to impact their evaluations of their portfolios they're going to shape their portfolio. That's going to have less risk. We want to design better techniques. Better analytics to help our investors and how they hey can be better prepared for the eventuality of physical change in the World Larry. Fink is founder and CEO of blackrock. Thanks for speaking with us

Coming up next