LONDON: BlackRock Chief Executive Larry Fink has warned company boards to step up efforts to tackle climate change or face increased wrath from investors concerned about how unsustainable business practices might curb their future wealth.
In his annual letter to CEOs, Fink said his firm believed sustainable investing was the "strongest foundation" for client portfolios and a "significant reallocation of capital" was likely in the near future as investors moved to protect their returns.
He said BlackRock would exit investments that presented high sustainability-related risk, including thermal coal producers, as it participated in what he described as a "fundamental reshaping of finance".
The world's largest investment manager is also strengthening its commitment to transparency in its stewardship activities, with portfolio managers "increasingly disposed to vote against management" if they felt companies were not making "sufficient progress on sustainability-related disclosures".
"We don't yet know which predictions about climate change will be most accurate nor what effects we have failed to consider. But there is no denying the direction we are heading," the veteran investor said in the letter.
"Every government, company and shareholder must confront climate change."
New York City-based BlackRock is one of the biggest asset management firms in the world. It provides investment management, risk management and advisory services to clients worldwide, managing assets totalling US$6.96 trillion as of September 2019.