BlackRock Chairman and CEO Laurence D. Fink announced the money manager is committing to achieving net-zero greenhouse gas emissions by 2050 and is urging other companies to do the same.
In his annual letter to CEOs released Tuesday, the head of the world's largest money manager wrote that the COVID-19 pandemic accelerated sustainable investing, with assets in sustainable mutual funds and ETFs reaching $288 billion globally as of Nov. 30, up 96% from Dec. 31, 2019.
Mr. Fink wrote that this "tectonic shift ... will accelerate further" and have profound effects on the global investment industry.
"The world is moving to net zero, and BlackRock believes that our clients are best served by being at the forefront of that transition," Mr. Fink wrote. "We are carbon neutral today in our own operations and are committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner."
The BlackRock chairman went on to add that he believes "all companies — including BlackRock — must begin to address the transition to net zero today."
In the letter, Mr. Fink called on companies to "disclose a plan for how their business model will be compatible with a net-zero economy." Specifically, he defines this plan as "one where global warming is limited to well below" 2 degrees Celsius and bringing net greenhouse gas emissions to zero by 2050. The letter also argues for a single global standard of disclosure.
"While the transition will inevitably be complex and difficult, it is essential to building a more resilient economy that benefits more people," Mr. Fink wrote. "I have great optimism about the future of capitalism and the future health of the economy — not in spite of the energy transition, but because of it."
In a separate letter send to BlackRock's clients Tuesday, Mr. Fink outlined the steps BlackRock is taking to help its clients prepare for and take advantage of "a net zero world."
These steps include publishing a temperature alignment metric for its equities and fixed-income funds; incorporating climate considerations into its capital markets assumptions; implementing a "heightened-scrutiny model" in its active portfolios to manage holdings that pose significant climate risk; launching investment strategies with explicit temperature alignment goals; and using stewardship to ensure that the companies in which BlackRock's clients are invested are both mitigating climate risk and considering investment opportunities within the net-zero transition.
BlackRock managed $8.7 trillion in assets as of Dec. 31.