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Business leadership in society

BlackRock drives a tipping point on climate action

By January 16, 2020No Comments

Larry Fink’s 2020 CEO letter and his commitment that BlackRock will now be front and forward on climate change across all of BlackRock’s assets under management represents a critical turning point in the climate fight. As the world’s largest asset manager, with $7 trillion under management, BlackRock’s leadership will now put pressure on State Street and Vanguard, the other two members of the big three asset managers, to follow suit. Together, these three firms are the majority shareholders in 88% of the S&P 500, with the power to dramatically influence corporate behavior and ensure climate change is on the agenda of every corporate board. All are universal owners and hold illiquid and permanent ownership positions, which gives them stronger incentives to actively influence corporations to adopt policies that will mitigate long-term risks like climate change to ensure a sustainable revenue stream for their investors’ beneficiaries.

There has been criticism in recent years of the growing concentration of power in the big three. In an era, however, where governments are wracked by partisanship in the short-term, next-election perspective, it may be that large asset owners and managers with a long-term commitment to multiple generations of beneficiaries may be the key to addressing the climate change challenge.

Read Larry Fink’s Letter to CEOs here.