Concerns about climate change will drive a “fundamental reshaping of finance”, one of the world’s biggest money managers has said.
Larry Fink, who runs BlackRock, said the shift will happen “sooner than most anticipate”.
His company has announced “sustainable” versions of its traditional investment options to meet demand from clients.
It has also said it would push firms to disclose more about a range of issues, including climate commitments.
While markets have been slow to reflect the worries about climate change, Mr Fink said the corporate world is now catching up.
“Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance,” he wrote in an annual letter to chief executives.
“In the near future – and sooner than most anticipate – there will be a significant reallocation of capital.”
In a letter to clients, BlackRock – which manages nearly $7tn in assets – said it was taking a number of steps to respond to the investment risks linked to climate change.
In addition to the sustainable funds, it said its investors would be able to screen their portfolios for certain sectors.
For actively managed funds, the company also plans to sell its holdings of companies that derive more than 25% of their revenue from thermal coal production by mid-2020.
‘Seriously consider sustainability’
Even if only 5% of investors opt for sustainable strategies, it will still produce “massive shifts”, Mr Fink said.
“The commitments we are making today reflect our conviction that all investors – and particularly the millions of our clients who are saving for long-term goals like retirement – must seriously consider sustainability in their investments,” he wrote in the letter to clients.
But, he added: “The choice remains with you”.
The Sierra Club, an environmental group, said BlackRock’s announcements were a “major step in the right direction” that will put pressure on competitors to take similar steps.
But the fund manager continues to hold sizable investments in coal, oil and gas.
And the Sierra Club said it would be watching to see whether BlackRock flexes its shareholder muscle in upcoming climate-related votes at the companies it invests in.
“It is time to turn off the money pipeline to dirty fossil fuels for good,” said Ben Cushing, the organisation’s campaign representative.
“BlackRock should expand on its commitments and other financial institutions should follow suit.”
Mr Fink’s letter puts a spotlight on a growing trend among investors who worry about the industries they are funding.
Investments in some “sustainable” funds jumped to $20bn in 2019, nearly four times the previous year’s record, according to data from Morningstar.
In the US, assets managed with sustainable investing strategies now represent more than a quarter of all investment assets under professional management, according to estimates by the Global Sustainable Investment Alliance.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
