Posted on January, 14 2020

There are three significant messages in Larry Fink’s annual letter to CEOs this year.

First, he called out an impending reallocation of capital as a result of climate change, as markets start to price in the impacts already happening and those still to come as a result of the climate crisis – a reallocation he calls “significant” and says will occur “sooner than most anticipate”. As the world’s largest asset manager, that statement alone should send a strong signal to the capital markets to get ahead of this change.
 
Second, in his related letter to BlackRock clients, he commits to exit thermal coal production investments in their “discretionary active investment portfolios” by the middle of 2020. While most of their assets remain in a passive investment strategy, and this statement applies only to public securities, and only those companies that generate more than 25% of their revenues from thermal coal production, it is still an important signal.
 
Third, and potentially most significantly, in both letters Fink addresses BlackRock’s engagement strategy, stating that they will be using not just their voice but their vote, too.

"We look forward to BlackRock increasing the pressure in board rooms to move more quickly to deliver the transition necessary to avoid the catastrophic impacts of the climate crisis" Margaret Kuhlow, WWF Finance Practice Lead