YNTR Up on BlackRock CEO Larry Fink’s Influence on the Climate Economy

To understand shifts in the climate economy, You Need to Read up on BlackRock CEO Larry Fink. I have a podcast and a quick article to help: New York Times’ The Daily podcast Can Corporations Stop Climate Change? by Michael Barbaro and Andrew Ross Sorkin (transcript here), and Bloomberg Green’s Elizabeth Warren Urges BlackRock’s Fink to Back Disclosure of Climate Risk by Saijel Kishan.

The Daily’s episode with Sorkin brilliantly recaps the outsized impacts of Larry Fink’s annual letter to CEOs in 2016 and 2018, and then underscores why Larry Fink’s opinion matters:

It has weight. Because he genuinely is the largest investor in the world… He can vote that board out if he doesn’t like what they’re doing. In certain cases, he can pull his money from their companies if he doesn’t like what they’re doing. 

Of the 2020 letter’s stance on climate, Sorkin explains:

He’s saying for the very first time, as the largest investor in the world, that climate change has to become an integral part of the investing thesis for companies. And more importantly, that C.E.O.s and companies themselves now have to change and think about climate change. And if they don’t, he’s going to be pulling his money from them.

 

…this is not driven by ideology. It’s not driven by politics. It’s driven frankly by money. He thinks that there’s now a genuine business risk and cost to not doing anything.

He goes on to concisely lay out the immediate chorus of reactions to this letter, from Microsoft to Delta to Jeff Bezos’ $10 billion pledge, and which are substance vs hype.

And literally within the next 21 days company after company starts announcing new initiatives around climate.

So it’s no surprise that in an open letter, four US Senators are now asking BlackRock CEO Larry Fink to back policy requiring companies to measure and disclose climate risk:

– Senators ask asset manager to go beyond sustainability pledge
– Law would reveal public companies’ exposure to climate change

Like similar letters sent to the 8 major US banks in January, the Senators’ letter presses for BlackRock to comment on risk and on what concrete steps they have taken since making their public commitments.

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