Blackrock, the world’s largest fund, has joined a coalition of investors fighting climate change

Blackrock (513.1, 6.00, 1.18%), the world’s largest fund manager, will join the “climate action 100+”, a coalition of investors focused on tackling climate change, with a combined asset base of more than $41 trillion. Ping an, China asset management and warburg industrial are among the few Chinese investors to join the alliance.
Blackrock, the world’s largest fund manager by assets of $6.8tn, announced on Thursday that it was joining Climate Action 100+, an increasingly powerful coalition of investors focused on fighting Climate change. After joining the alliance, blackrock’s investment vehicles have combined assets of more than $41tn.

More than 370 global investors, including sovereign wealth funds, pension funds, insurance companies and fund companies, have joined climate action 100+, an alliance that aims to use the capital power of investment institutions to push their companies to take active action on climate change.

But some of the world’s top fund companies, such as blackrock and vanguard, have not previously joined the group, presumably because they are mostly index funds that are less handy than active funds in getting public companies to deal with climate change.

As a signatory to the action agreement, blackrock will work with listed companies to ensure that they can: take action to reduce greenhouse gas emissions across the value chain in line with the overall objectives of the Paris agreement; Implement a strong governance framework that clearly spells out the council’s responsibility and oversight of climate change risks and opportunities; Enhance corporate disclosure in accordance with the recommendations of the climate related financial disclosure task force (TCFD).

“Climate change presents a systemic risk to investors and an opportunity for the industry to develop innovative solutions,” said Anne Simpson, a member of the 100+ steering committee for climate action and director of governance and strategy for the board of CalPERS, the California public employees’ retirement system.

“That’s why we launched climate action 100+, which focuses on working with businesses to reduce their carbon emissions and to align them with the goals set out in the Paris agreement.” She said.

A recent study by the us national bureau of economic research (NBER) found that without mitigation and non-compliance with the 2015 Paris agreement, a sustained increase in global average temperature of 0.04°C per year would result in a 7.22 per cent reduction in world real gross domestic product per capita by 2100.

Research suggests that climate change will have a significant impact on investment. The California public employees’ pension system (CalPERS), America’s biggest public pension fund, has published its first report on climate change risk, putting 20% of its $180bn equity portfolio at risk of financial losses from climate change.

According to the climate action 100+ 2019 report, up to 80 percent of global industrial emissions come from the group’s target companies. Investors the group wants to join can do so by making shareholder statements at general meetings, voting to remove directors who fail to take responsibility for the risks of climate change, and promoting target companies through meetings or forums.

Since its launch in 2017, the alliance has prompted major companies such as shell, Thai petroleum, glencore, Rio tinto (58.29, -0.61, -1.04%), maersk, Volkswagen, nestle and petrochina to incorporate climate change into their corporate strategies. But the report notes that few of the coalition’s target companies explicitly support climate policy, and that more lobbying by investors is needed in the future.

China amc and warburg industrial fund are among the few institutional investors in China that have joined the 100+ climate initiative. Ping an earlier announced its participation in climate action 100+, becoming the first Chinese asset owner to join the alliance.

Robin Bell

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