The limits of BlackRock's new climate strategy
BlackRock's climate strategy rolled out Tuesday won't leave anyone confusing the asset management giant with Greenpeace, despite the suite of big new pledges.
Driving the news: Take the plan to dump producers of thermal coal — the stuff used in power plants — from their active portfolios.
- It targets companies that generate more than 25% of their revenue from thermal coal.
- But Bloomberg points out that "large, diversified miners — which also rank among the largest coal producers — won’t be affected."
- Coal revenue for mining heavyweights Glencore, Anglo American and BHP Group are all under the 25% threshold, Bloomberg notes.
But, but, but: A new update from the Institute for Energy Economics and Financial Analysis says BlackRock's coal policy is nonetheless consequential.
- They note it would likely capture firms including China Shenhua, China National Coal, Peabody Energy, Arch Coal Inc., Contura Energy, Adani Enterprises and many others.
- And, they note, BlackRock's vow to "closely scrutinize" companies that use lots of thermal coal could bring divestment from big power companies like Duke Energy.
The big picture: Most of the trillions of dollars BlackRock manages for clients are in passive funds, which means the company isn't directly picking the investments.
- Nonetheless, BlackRock's strategy does address passive investment vehicles. The firm is expanding offerings of sustainability-focused exchange-traded funds.
- Part of that plan would allow clients to select funds that do not include certain companies and sectors, including a "fossil fuel screen."
The bottom line: Environmentalists generally applauded BlackRock's moves but also acknowledged their limits.
- As the NYT notes, "Because of its sheer size, BlackRock will remain one of the world’s largest investors in fossil-fuel companies."
Go deeper: BlackRock vows focus on climate change