- New report reveals BlackRock’s high levels of coal exposure and climate inaction - with $85bn worth of assets managed by BlackRock invested in coal companies
- Findings come on anniversary of BlackRock CEO Larry Fink’s commitment to sustainability, and just days before Fink’s annual letter for 2021
- BlackRock coal policy affects just 17% of industry
- The policy applies to less than a third of BlackRock’s assets under management, as it ignores passive management
One year after BlackRock’s CEO, Larry Fink, promised sustainability would now be at the heart of investments decisions [1], research carried out by NGOs Reclaim Finance and Urgewald [2] on BlackRock holdings has revealed that BlackRock remains highly exposed to the coal sector, with holdings totaling $85bn.
Last month, BlackRock promised for the first time to back more investor resolutions [3] relating to climate issues. But our figures show that now more than ever [4], BlackRock’s needs to go far beyond improving its poor voting record [5]. Reclaim Finance and Urgewald call for BlackRock to immediately step up the ambition of its coal policy [6], which currently covers only 17% of the coal industry [7] and applies to less than one third of BlackRock’s total assets under management. Climate science shows that fossil fuel production must be reduced by 6% every year till 2030 and NGOs call on BlackRock to stop investing in companies that plan to develop new coal but also new oil and gas production projects.
“One year on, it’s hard to see Larry Fink’s sustainability commitment as anything other than greenwashing. 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,” says Lara Cuvelier, Sustainable Investment Campaigner at Reclaim Finance.
Major exposure to coal
Research by Reclaim Finance shows that despite BlackRock’s pledge to exit investments in thermal coal, USD 85 billion of assets managed by BlackRock are still invested in the coal industry. BlackRock’s exclusion of mining companies generating more than 25% of their revenues from coal production is widely incomplete as it covers only a fraction of the coal industry [8]. It allows the asset manager to invest in some of the biggest coal producers in the world such as Adani, or Europe’s biggest CO2 producers RWE and PGE. Furthermore, investments in coal companies that have expansion plans, such as Sumitomo or KEPCO, are over $24bn. Among these, BlackRock supports companies with plans to build new power plants which would increase capacity by 241 GW cumulatively, or over three times Germany’s and Poland’s coal power capacities combined.
BlackRock’s passive problem
Most importantly, BlackRock’s coal policy is not applied to index funds and ETFs which account for more than $5tn out of the $7.8tn the firm is managing. Analysis of BlackRock holdings show that money is flowing without any restriction to the coal sector through its index funds, including to companies that are banned from its active funds such as PGE or Coal India. In addition to the weak coal policy adopted for its active assets, BlackRock’s passive funds are also a threat to decarbonization as long as they are growing without robust exclusion criteria. [9]
“In order to effectively exclude the coal industry, BlackRock should drop all companies that are planning to expand existing or build new coal infrastructure. At the very least, companies with a coal share of revenue of 20% and a coal share of power production of 20% should be excluded from BlackRock's portfolios. Lastly, BlackRock needs to define a concrete phase-out date for all coal investments," says Katrin Ganswindt, Finance Campaigner at Urgewald.
With Larry Fink’s letter to its clients coming soon, BlackRock has the chance to start seriously tackling its fossil fuel addiction, in the run up to the crucial COP26 summit in Glasgow. Moving seriously on coal is the first step towards alignment to a 1.5°C scenario. This requires adopting a much more ambitious coal policy, as detailed in our report, and applying this policy to all assets under management.
The full report is available here: https://reclaimfinance.org/site/wp-content/uploads/2021/01/OneYearOnBlackRockStillAddictedToFossilFuels.pdf
Notes:
[1] https://www.ft.com/content/57db9dc2-3690-11ea-a6d3-9a26f8c3cba4
[2] Based on financial research by the Dutch research institute Profundo and related to the Global Coal Exit List database as of October 31, 2020
[3] https://www.blackrock.com/corporate/literature/publication/our-2021-stewardship-expectations.pdf
[4] The UNEP Production Gap report highlights that to limit warming to 1.5°C or well below 2°C, as required by the 2015 Paris Agreement, the world needs to wind down fossil fuel production, by roughly 6% per year between 2020 and 2030.
[5] https://citywireselector.com/news/blackrock-voted-against-climate-resolutions-over-80-of-the-time-in-2020/a1407553
[6] BlackRock’s coal policy can be found here in the paragraph “Exiting Thermal Coal Producers”.
[7] Blackrock's policy covers 162 companies including 91 listed companies, among the 935 companies in the Global Coal Exit List. Blackrock policy does not cover 773 companies including 333 listed companies.
[8] The policy does not exclude coal developers and covers only a part of the whole industry by focusing only on mining activities. It leaves aside power generation from coal and coal-related infrastructure. Coal power companies, who often mine and burn large amounts of coal to generate electricity, are not caught by the exclusion criteria because their revenues are generated from coal power rather than direct sales of mined coal.
[9] https://reclaimfinance.org/site/en/stop-expansion-fossil-fuels/#shale
Contacts:
Angus Satow | Campaign Communication, Reclaim Finance
angus@reclaimfinance.org, +44 784 775 4046
Jacey Bingler | Media Coordinator, Urgewald
jacey@urgewald.org, +49 175 521 7571
Katrin Ganswindt | Finance Campaigner, Urgewald
katrin@urgewald.org, +49 176 324 111 30
