Laurence D. Fink, the founder and chief executive of BlackRock, plans to announce Tuesday that his firm will make investment decisions with environmental sustainability as a core goal.
BlackRock is the largest in its field, with nearly $7 trillion under management, and this move will fundamentally shift its investing policy — and could reshape how corporate America does business and put pressure on other large money managers to follow suit.
Mr. Fink’s annual letter to the chief executives of the world’s largest companies is closely watched, and in the 2020 edition he said BlackRock would begin to exit certain investments that “present a high sustainability-related risk,” such as those in coal producers. His intent is to encourage every company, not just energy firms, to rethink their carbon footprints.
“Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance,” Mr. Fink wrote in the letter, which was obtained by The New York Times. “The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.”
The firm, he wrote, would also introduce new funds that shun fossil fuel-oriented stocks, move more aggressively to vote against management teams that are not making progress on sustainability, and press companies to disclose plans “for operating under a scenario where the Paris Agreement’s goal of limiting global warming to less than two degrees is fully realized.”
Mr. Fink has not always been the first to address social issues, but his annual letter — such as his dictum two years ago that companies needed to have a purpose beyond profits — has the influence to change the conversations inside boardrooms around the globe.
And now Mr. Fink is sounding an alarm on a crisis that he believes is the most profound in his 40 years in finance. “Even if only a fraction of the science is right today, this is a much more structural, long-term crisis,” he wrote.
A longtime Democrat, Mr. Fink insisted in an interview that the decision was strictly business. “We are fiduciaries,” he said. “Politics isn’t part of this.”
BlackRock itself has come under criticism from both industry and environmental groups for being behind on pushing these issues. Just last month, a British hedge fund manager, Christopher Hohn, said that it was “appalling” of BlackRock not to require companies to disclose their sustainability efforts, and that the firm’s previous efforts had been “full of greenwash.”
Climate activists staged several protests outside BlackRock’s offices last year, and Mr. Fink himself has received letters from members of Congress urging more action on climate-related investing. According to Ceres and FundVotes, a unit of Morningstar, BlackRock had among the worst voting records on climate issues.
In recent years, many companies and investors have committed to focusing on the environmental impact of business, but none of the largest investors in the country have been willing to make it a central component of their investment strategy.
In that context, Mr. Fink’s move is a watershed — one that could spur a national conversation among financiers and policymakers. However, it’s also possible that some of the most ardent climate activists will see it as falling short.
Even so, the new approach may put pressure on the other large money managers and financial firms in the United States — Vanguard, T. Rowe Price and JPMorgan Chase, among them — to articulate more ambitious strategies around sustainability.
When 631 investors from around the world, representing some $37 trillion in assets, signed a letter last month calling on governments to step up their efforts against climate change, the biggest American firms were conspicuously absent.
BlackRock’s decision may give C.E.O.s license to change their own companies’ strategy and focus more on sustainability, even if doing so cuts into short-term profits. Such a shift could also provide cover for banks and other financial institutions that finance carbon-emitting businesses to change their own policies.
Had Mr. Fink moved a decade ago to pull BlackRock’s funds out of companies that contribute to climate change, his clients would have been well served. In the past 10 years, through Friday, companies in the S&P 500 energy sector had gained just 2 percent in total. In the same period, the broader S&P 500 nearly tripled.
In an interview, Mr. Fink said the decision developed from conversations with “business leaders and how they’re thinking about it, talking to different scientists, reading different research.” Mr. Fink asked BlackRock to research the economic impacts of climate change; it found that they are already appearing in a meaningful way in the form of higher insurance premiums, for fires and floods, and expects cities to have to pay more for their bonds.
Wherever he goes, he said, he is bombarded with climate questions from investors, often to the exclusion of issues that until recently were once considered more important. “Climate change is almost invariably the top issue that clients around the world raise with BlackRock,” he wrote in his letter.
He wrote that he anticipated a major shift, much sooner than many might imagine, in the way money will be allocated.
“This dynamic will accelerate as the next generation takes the helm of government and business,” he wrote. “As trillions of dollars shift to millennials over the next few decades, as they become C.E.O.s and C.I.O.s, as they become the policymakers and heads of state, they will further reshape the world’s approach to sustainability.”
While BlackRock makes its green push, the Trump administration is going in the opposite direction, repealing and weakening laws aimed at protecting the environment and promoting sustainability. Indeed, Mr. Fink’s effort appeared to be another example of the private sector pressing on issues that the White House has abandoned.
Still, Mr. Fink made plain that while he intends for the firm to consider climate risks, he would not pursue an across-the-board sale of energy companies that produce fossil fuels. Because of its shear size, BlackRock will remain one of the world’s largest investors in fossil-fuel companies.
“Despite recent rapid advances in technology, the science does not yet exist to replace many of today’s essential uses of hydrocarbons,” he wrote. “We need to be mindful of the economic, scientific, social and political realities of the energy transition.”
BlackRock manages money for countries across the globe as well as states and municipalities across the nation. It could face opposition for its new stance in areas that benefit from fossil fuels, like countries in the Middle East or states where oil has become a significant part of their economies.
Mr. Fink said that because much of the money BlackRock manages is invested in passive index funds like those that track the S&P 500, the firm was unable to simply sell shares in companies that it felt were not focused on sustainability. But he did say that the firm could do so in what are known as “actively managed funds,” in which BlackRock can choose which stocks are included.
BlackRock also plans to offer new passive funds — including target-date funds that are based on a person’s age and are meant to be used to prepare for retirement — that will not include fossil fuel companies. Investors will be able to choose these instead of more traditional funds. To the extent that fossil fuel companies are in an index, BlackRock plans to push them to consider their eventual transition to renewable energy. Mr. Fink said the company would vote against them if they are not moving fast enough.
“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,” he wrote.
London Community Foundation tackling lack of housing with $20-million investment – Global News
The London Community Foundation (LCF) is committing up to $20 million to addressing London’s affordable housing crisis.
The funds will be used to create a dedicated affordable housing fund of $17 million to $20 million to support the creation of more affordable housing options in the city.
“Adequate, safe and affordable housing should not be out of reach,” said LCF president and CEO Martha Powell.
“The shortage of affordable housing in our community is at a crisis point.”
London currently has a housing shortage of 3,000 units and more than 2,400 individuals and families accessing emergency shelters each year.
The fund is designed to offer flexible financing for community organizations interested in creating affordable housing.
According to the LCF, a major barrier to entering the affordable housing market is the high startup costs.
LCF is proposing low-interest, early-stage, flexible financing to help groups with initial startup costs like fund assessments, land acquisition, and planning and zoning expenses needed before the first phase of a project can be completed.
This idea builds upon the concept of LCF’s $10-million Social Impact Fund, which has helped to create 341 units of affordable housing.
In addition to the $20-million fund, the foundation announced the establishment of a Housing Action Committee, which will identify organizations that have an interest and capacity to help create affordable housing but who need more information and financial assistance to develop their plans.
“We hope to help those already providing housing solutions and those who may be able to help,” said committee chair John Nicholas.
© 2020 Global News, a division of Corus Entertainment Inc.
Kate Middleton and Prince William host glamorous reception for UK-Africa Investment Summit
William a speech at the event in which he spoke about the important relationship between the UK and Africa.
“The African continent holds a very special place in my heart,” the Duke of Cambridge said in a speech after arriving in the Music Room for the event. “It is the place my father took my brother and me shortly after our mother died.
“And when deciding where best to propose to Catherine I could think of no more fitting place than Kenya to get down on one knee.
“Throughout my life, I have been lucky enough to spend time in many other parts of Africa. I’m also honoured to be the Patron of the Royal African Society.
“And as Catherine and I have said to several of you here tonight, we hope to have the chance to visit many more countries in the future and share our mutual love of your continent with our children.”
Photo: © Yui Mok/AFP via Getty Images
Supporting employees and families in crisis is a good investment – Campbell River Mirror
Coping with stressful situations can be difficult at the best of times.
Supporting coworkers who are trying to process the loss of a loved one, marital separation, addiction issues or other life circumstances can also be challenging. While one’s co-workers, managers – even business owners – may be supportive and well-intentioned, they may not be equipped to adequately help someone through a difficult time or crisis.
It’s an issue more companies are addressing as a way to invest in their employees’ health and well-being, says Kelsi Baine, executive director and certified counsellor with Upper Island Counselling in Campbell River. Having a professional outside agency on standby to help employees and their families manage difficult times can be a good short- and long-term strategy, she adds.
Putting the ‘human’ into HR
If you oversee human resources for your company, no matter what its size, knowing how to respond when a staff member needs personal help can be tricky. Baine says many of her member companies learned about UIC’s Employee and Family Assistance Program through conversations and referrals from other HR professionals.
“For those in HR, when someone is struggling in their office, they want to support them, but they recognize they’re not a counsellor,” Baine says. “So they want to have a trusted and effective resource they can suggest as a way to best help them. Sometimes we’ve heard that one HR director will tell another, ‘if you don’t have this resource in your back pocket, you’re missing out.’”
Getting people the help they need
Brian Cruise, of Cruise HR Solutions, works with employers on ways to better support their staff. He agrees managers often struggle to help employees deal with personal issues that may be affecting their work.
“Those of us in the HR world, we’re not trained counsellors, so you often hesitate to involve yourself with employees because it’s unfamiliar turf,” he says. Not only that, he adds, employees can be reluctant to divulge personal struggles fearing that doing so may reflect badly on their work performance. “People are much more likely to talk openly and honestly with someone not connected with their workplace.”
Healthy workers mean healthy companies
With company owners or upper management focusing on running the business, it’s often operational staff who initiate discussions about the need for outside resources, Baine says.
“Frontline workers know when something is going on in someone’s life that requires taking time off or the availability of counselling supports,” she says. “When requests for more supportive services come from the ground up, many employers are receptive – they see it as a wise investment in their people, and we couldn’t agree more.”
If you’d like to find out how Upper Island Counselling can help you, your family and the people you work with, visit uics.ca or call 250-287-2266.
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