BlackRock CEO Larry Fink's just-released annual letter to portfolio company CEOs: "A Fundamental Reshaping of Finance" homes in on the critical importance and impacts of sustainability generally, and climate risk specifically, on investment approaches, financing, and companies' long-term prospects, and the global nature of these phenomena. In this regard, BlackRock believes better corporate sustainability disclosure is a must in order for investors to understand and have sufficient comfort in companies' management of the risks and - relatedly - their long-term growth prospects.
Acknowledging its own challenges and goals in improving its sustainability disclosure - which include BlackRock's planned TCFD-aligned disclosure by the end of 2020, in addition to its current SASB disclosure, BlackRock is calling on its portfolio companies that have not already done so to: (1) disclose in accordance with SASB standards or a similar set of company-relevant data by year-end; and (2) disclose climate-related risks in line with the TCFD’s recommendations, including the company's plan for operating in accordance with a Paris Agreement-attained scenario.
The letter also includes a link to BlackRock's concurrent letter to its clients, which outlines several initiatives BlackRock is undertaking in furtherance of its view on the import of sustainable investing including sustainability-integrated portfolios, portfolio ESG risk reduction, e.g., divesting from thermal coal producers in discretionary active investment portfolios, new sustainable investment offerings; and intensified focus and engagement with companies on sustainability-related risks, which will be reflected in BlackRock's engagement priorities and proxy voting guidelines; voting and engagement disclosure; and proxy voting.
A series of referenced FAQs responds to the basis for and implications of BlackRock's sustainability focus and what that means in an investment context.
See these articles from Reuters, The New York Times and Bloomberg. Watch for additional commentary and analysis to be posted on our Institutional Investors page under "BlackRock" here. This post first appeared in this week's Society Alert!