Climate Commitments by BlackRock

Yesterday’s announcement by the Vatican on carbon pricing as a control on climate impacts included BlackRock, Inc., the largest asset management company in the world. They hold over 6.5 trillion dollars in assets for institutions and individual investors. They created iShares exchange-traded funds (ETFs) which holds stocks like an index mutual fund that are traded as stocks with low management fees. They also manage U.S. federal employee retirement pensions in the Thrift Saving Plan.

First for full disclosure, I own stock in BlackRock (NYSE:BLK) but it has not performed well in the past 52 weeks, down 15%. The yield of over 3% is attractive and has a low price to earnings ratio (P/E). They have 70 offices in 30 countries but recently needed layoffs to control costs.

According to the BlackRock history webpage, eight people created BlackRock in 1988 (including the current CEO Larry Fink) “to put clients’ needs and interests first.” They became a public company in 1999 and have tremendous influence on other companies and investors.

In September 2016, BlackRock issued a statement on climate change: “Investors can no longer ignore climate change. Some may question the science, but all are faced with a swelling tide of climate-related regulations and technological disruption. We show how to mitigate climate risks, exploit opportunities or have a positive impact.”

In January 2019 they announced the BlackRock Investment Stewardship’s approach to engagement on climate risk, “As part of its investment process on behalf of its clients, BlackRock assesses a range of factors that might affect the long-term financial sustainability of the companies in which we invest. We have determined that climate change presents significant investment risks and opportunities that have the potential to impact the long-term value of many companies.”

Therefore, BlackRock is taking a leadership role in the climate change debate by showing business sustainability must consider short and long-term risk factors. Climate change poses the greatest risk to humanity so businesses cannot afford to ignore science realities despite the noise and confusion coming from some sectors of government and industry.