BlackRock makes climate change central to investment decisions | News | DW | 14.01.2020
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BlackRock makes climate change central to investment decisions

The world's largest asset manager will begin to divest holdings in companies that focus on coal production. "We are on the brink of a fundamental re-shaping of finance," the CEO announced.

Investment management giant BlackRock has vowed to put sustainable investment at the heart of its future investment decisions worldwide, founder and CEO Laurence Fink announced on Tuesday.

The world's largest asset manager will divest holdings in companies that generate more than a quarter of their sales from thermal coal production, Fink said in a letter to shareholders on Tuesday.

"We believe that sustainable investing is the strongest foundation for client portfolios going forward," Fink wrote.

Read more: Will German Uniper power plant be hauled over the coals?

BlackRock, which also has a large presence in Germany, oversees the management of around $7 trillion (€6.3 trillion) worldwide. Fink said that the decision was partly made after the climate crisis became the issue most often raised by clients.

"We are on the edge of a fundamental re-shaping of finance" because of the warming planet, Fink wrote.

The change in investment policy will take place immediately, but will only affect direct investments. Direct investments make up around $1.7 trillion (€1.53 trillion) of Blackrock's $7 trillion holdings.

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Why is the timing of the decision important?

In future, BlackRock will also require clients to disclose their climate-related risks.

"We will be increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures and the business practices and plans underlying them," Fink added.

The decision comes one day after German engineering conglomerate Siemens announced they will push forward with their involvement in coal extraction in Australia despite the ongoing bushfires.

Read more: Opinion: Siemens chooses profits over environment

Protesters across Germany rallied against the decision to continue to provide infrastructure support to the proposed Adani-owned Carmichael mine, given the links scientists have drawn between coal mining in Australia and the bushfire crisis.

Massive fires have scorched an area the size of Ireland across Australia, making it one of the most disastrous events in the country in living memory. Scientists say climate change is responsible for the fires' devastating intensity.

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ed/ng (AP, AFP, Reuters)

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