BlackRock, the world’s largest investment manager, announced that it will no longer invest in thermal coal. It also said it will drop company directors who fail to act on financial risks from climate change.
As a result, BlackRock will drop around $500 million in thermal coal investments. It manages around $7 trillion of funds.
According to the Guardian, BlackRock has announced several new changes in its investment approach, including:
Making sustainability integral to portfolio construction and risk management;
Exiting investments that present a high sustainability-related risk, such as thermal coal producers;
Launching new investment products that screen fossil fuels;
And strengthening our commitment to sustainability and transparency in our investment stewardship activities.
BlackRock has joined Climate Action 100+, a pressure group of large asset managers that calls for the biggest polluters to reduce their emissions to respond to the climate crisis.
BlackRock’s plan
In a letter to clients, BlackRock’s Global Executive Committee said:
Thermal coal is significantly carbon intensive, becoming less and less economically viable, and highly exposed to regulation because of its environmental impacts. With the acceleration of the global energy transition, we do not believe that the long-term economic or investment rationale justifies continued investment in this sector.
As a result, we are in the process of removing from our discretionary active investment portfolios the public securities (both debt and equity) of companies that generate more than 25% of their revenues from thermal coal production, which we aim to accomplish by the middle of 2020.
As part of our process of evaluating sectors with high ESG risk, we will also closely scrutinize other businesses that are heavily reliant on thermal coal as an input, in order to understand whether they are effectively transitioning away from this reliance.
As Electrek reported on January 14, Larry Fink, CEO of BlackRock, said in an annual letter to CEOs:
In the near future — and sooner than most anticipate — there will be a significant reallocation of capital.
Some environmental groups, such as Extinction Rebellion, are skeptical about BlackRock’s announcement, while others, such as the Sunrise Project, which supports climate-crisis campaign groups, welcomes the news.
“Putting climate change at the absolute center of its business is the way every company should respond to this planetary emergency,” said Diana Best of the Sunrise Project [via the Guardian].
Coal’s casualties
Meanwhile, in the coal industry, coal companies like Murray Energy are declaring bankruptcy. As Electrek reported on December 18, “[CEO] Robert Murray spent tens of millions from the company coffers to pay himself, his successor, and several anti-science and anti-environment lobby groups, according to new court filings.”
But this week, Quest Energy’s coal miners in Kentucky blocked coal shipments because they haven’t been paid.
The miners said about 50 employees are owed for three weeks of work, totaling $2,000 to $3,000 [each].
The blockade echoes a protest that miners in Harlan County carried out last summer when a coal company called Blackjewel filed bankruptcy.
The final checks the company issued to hundreds of miners in Kentucky, Virginia, and West Virginia bounced, leaving many overdrawn.
Electrek’s Take
Fink’s hint in his letter to CEOs wasn’t exactly subtle. BlackRock didn’t mess around, announcing their termination of thermal coal investments just two days later.
We at Electrek firmly believe that the only way emissions can be reduced is for fossil-fuel investments to stop, and for green energy investments to be significantly boosted. The science and technology and innovation is there — it needs financial support.
Fossil fuels will be less and less viable as they become more expensive, and the government subsidies for these polluters must stop. Money should be put toward growth of green energy. BlackRock’s announcement is a welcome one.
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