BlackRock CEO says climate change is an investment risk

BlackRock CEO says climate change is an investment risk

The Chief Executive Officer of BlackRock said on Wednesday in an interview with Bloomberg that climate change could become a risk to investors.

BlackRock’s CEO Larry Fink commented on the topic during an interview with the Editor-In-Chief of Bloomberg John Micklethwait at Bloomberg’s The Year Ahead event, which is held alongside the World Economic Forum in Davos.

The debate surrounding climate change has accelerated recently, with activists such as Greta Thunberg advocating the urgent need to give attention to the climate crisis.

“Clients worldwide had been asking me repeatedly more and more about how should they frame a portfolio with climate change considerations,” Larry Fink said in the interview with Bloomberg.

“It was very clear to me that this is becoming a dominant theme in more and more of our investors.”

“I wasn’t prepared to answer many of those questions at that moment, and it was very clear to me that I needed to focus on it,” Larry Fink continued.

“I need to get BlackRock to focus on it. From September through the end of the year, we spent a great deal of time focusing on it.”

“I spent a great deal of time talking to insurance company CEOs. I talked to the CEOs of the housing companies of America, and I talked to some different mayors, and I had conversations worldwide related to the impact.”

“It was clear whether it was 10% or 20% more of our clients, it was clear to me that more and more clients were now thinking about how should they invest.”

“It was very clear to me the whole issue of climate change is really related to whether it is certainty or uncertainty as a science.”

Larry Fink continued: “I am not a scientist, but more and more, people are believing in some form of science, if not all the science. By being in the capital markets now for 44 years, it’s very clear we in the capital markets bring risk forward. We don’t wait until the risk is in front of us.”

“In most cases, we navigate the risk, and through that process, we mitigate most risk. So the process of having more and more clients focusing on these issues was very clear to me that there’s a greater belief of the science, and as a result of that now, we should not avoid the conversation about climate change.”

“Climate change is now becoming an investment risk.”

“Investors focus on yield curve of whatever forms of risk we have. It was very clear to me now we need to bring forward better risks tools to navigate risk. This is a component of the letter asking more companies to be self reporting on things so we have better clarity and understanding how each company is navigating this issues.”

“I’m not here to tell you these are the best tools. They are good tolls, and hopefully we have better tools. I do believe we are on this long path, and in 2019, most of the sustainable funds outperformed regular funds.”

“You could argue that is a big momentum trade. We had record inflows […] Record flows in ESG. We announced every one of our products was going to have a sustainable counterpart so we could bring this forward and have more investors as part of this dialogue,” Larry Fink concluded the Bloomberg interview.

You can watch the full interview for yourself on Bloomberg’s website here.

Last year saw the rise of climate change activism, with figureheads like Greta Thunberg advocating the need to urgently address the issue.

Greta Thunberg addressed the World Economic Forum on the topic:

Do you see climate change becoming a risk to your investment portfolio?

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