Major Investor Threatens Non-Sustainable Companies with Withdrawal of Money

BlackRock is the giant among internationally active investment companies: with 8.68 trillion U.S. dollars in assets under management, the company is the world's largest asset manager, whose client base includes private investors and institutions such as banks, pension funds, foundations, insurers, sovereign wealth funds and central banks. In Germany alone, the U.S. company holds shares of various sizes in all 30 DAX companies.

And so company boss Larry Fink's threat is likely to cause unease among several corporations. Fink, Chairman of BlackRock, had declared in his annual letter to CEOs all over the world that his company wants to sell shares of the worst non-sustainable companies in the future to support the goal of 'net zero' carbon dioxide emissions by 2050. To this end, all companies whose shares BlackRock holds are to disclose their plans to achieve this climate protection target, as e.g. reported by the Guardian.

This could lead to BlackRock subsequently divesting from companies without clear climate protection goals in its actively managed funds if they don't improve - which could equate to about a tenth of its total assets.

Although BlackRock has so far only invested the comparatively small sum of 616 billion dollars, i.e. about 7%, taking environmental, social or governance criteria into account, the company's influence in the area of sustainable investments is already considered immense. However, COVID-19 and the discussion about a sustainable recovery (Green Recovery) have increased the focus of many investors on the issue of sustainability. "I believe that the pandemic has presented such an existential crisis – such a stark reminder of our fragility – that it has driven us to confront the global threat of climate change more forcefully and to consider how, like the pandemic, it will alter our lives,” Fink said in his letter.

Whether the Corona pandemic will lead to a long-term rethinking of climate protection remains to be seen (Image: Pixabay)

Environmental activists welcomed BlackRock's decision, but for many the push doesn't go far enough. "The announcements still contain too few concrete steps that would make it measurable to the outside world how BlackRock plans to clean up its now 8.7 trillion dollar business from coal, oil and gas companies," said environmental and human rights organisation urgewald, according to the German Spiegel.

Climate activist Greta Thunberg used the annual meeting of the World Economic Forum, currently taking place online, to call for more action: "We understand that the world is very complex and that change doesn’t happen overnight. But you’ve now had more than three decades of blah blah blah. How many more do you need?" she declared in a video posted on Twitter.

So it remains to be seen whether BlackRock will actually back up words with action.