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BlackRock throws its $10tn behind Climate Action 100+

Timothy MooreBefore the Bell editor
Updated

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BlackRock, the world's largest asset manager, has become a signatory to Climate Action 100+, joining more than 370 other investors, including AustralianSuper, amid a heightening global focus on climate risks.

The decision follows criticism that BlackRock wasn't as "green" as it led investors to believe, and a warning by Emily Chew, chairwoman of the steering committee of Climate Action 100+, that big investors would intensify their activism on climate change in 2020, including voting against directors on climate-related shareholder resolutions.

In a statement, BlackRock said the decision to join the group was "a natural progression" of work done within the investment firm to date.

"We believe evidence of the impact of climate risk on investment portfolios is building rapidly and we are accelerating our engagement with companies on this critical issue.”

With the addition of BlackRock, and the $US6.8 trillion ($10 trillion) in assets it manages, investors with more than $US41 trillion in assets under management have signed on to the Climate Action 100+ initiative.

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Climate Action 100+ already counts Allianz, AXA, PIMCO, Aberdeen Standard, California Public Employees’ Retirement System (CalPERS), and the investment arms of global banks such as HSBC, Wells Fargo, UBS and BNP Paribas among its members.

In Australia, AMP Capital, BT, First Sentier Investors (formerly Colonial First State Global Asset Management), AustralianSuper, QSuper and IFM Investors are all members.

Last year the group played a major role in persuading coal miner Glencore to cap coal production at 2019 levels.

“The physical and economic threats of climate change have again been evident in the devastating and unprecedented bushfires raging across Australia,” said Emma Herd, member of the Climate Action 100+ steering committee.

“We need deeper and more urgent action from those companies who hold the key to making the zero emissions transition that will de-risk our economies and communities from climate change."

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“We look forward to working with BlackRock to build on the initiative’s success and work to ensure companies take the urgent and necessary action needed in response to the climate crisis," Ms Chew added.

ESG wake-up call

In its 2020 global outlook, BlackRock said sustainability-related factors "such as climate change are having real-world consequences, affecting asset prices as investors pay growing attention".

BlackRock argued in the report that a focus on sustainability can help add resilience to portfolios as markets wake up to environmental, social and governance (ESG) risks.

"The transition to a low-carbon world will likely require new business models, investment in sustainable infrastructure, and new regulations that may be costly. Climate change also poses physical risks to real assets."

In the context of profit margins, BlackRock said "an increasing focus on sustainability poses an additional threat to some sectors, with carbon-intensive companies facing risks such as higher taxes and cost of capital".

Timothy Moore writes on monetary policy, equities, commodities and currencies. He is the overnight markets editor and writes Before the Bell. Connect with Timothy on Twitter. Email Timothy at timothy.moore@afr.com

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