In his annual letter to other CEOs BlackRock CEO Larry Fink explains, "Climate change has become a defining factor in companies' long term prospects... awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance". In the same quarter previous year, the company had posted a much lower $927 million in net income ($5.78 of earnings per share).
Investors poured US$20.6 billion into sustainable funds last year, almost quadrupling the record it had set a year earlier, according to Morningstar.
"In the near future - and sooner than most anticipate - there will be a significant reallocation of capital", he added.
Noting that BlackRock and the other investors have stated a commitment to climate action and a concern about climate risk, the Senators wrote: "Marathon's pattern of repeatedly opposing efforts to limit carbon pollution should be doubly concerning: first, because the transition to a low carbon economy is inevitable, and by deciding to forgo any diversification strategy: and second, because Marathon's effort to undermine climate policy run directly counter to your stated commitment in favor of climate action".
He revealed that it is the top issue that clients invariably raise with BlackRock, and that this is driving a "profound reassessment of risk" and asset values worldwide.
With much attention now on geographic locations around the world where the effects of climate change are thought to be keenly felt, including the fires in Australia, rising seas in coastal areas and receding glaciers in the Arctic zone, the potential effects of climate change on other aspects of human culture, such as economic decision-making, has not always generated the same headlines.
This approach to investing comes after a yearslong evolution for the industry, which began with simple funds that bluntly excluded stocks deemed as harmful, such as gun makers or tobacco stocks.
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The firm's success brings BlackRock new scrutiny on everything from responsibilities as a shareholder on behalf of investors to its reach across markets.
Mr. Fink said that public companies across the corporate world are now being held to higher standards. Investors, particularly younger ones, increasingly say they want their money invested with an eye toward sustainability.
BlackRock's alternative investments business will make no new direct investments in companies that fall under the same criteria.
Part of that plan would allow clients to select funds that do not include certain companies and sectors, including a "fossil fuel screen". At the time of writing, the stock is exchanging hands at $530.26 that marks an around 40% growth for BlackRock in the stock market as compared to the opening level in 2019.
The company has faced protests, including outside its Munich headquarters, and an appeal from Greens leader Richard Di Natale to walk away from the Adani project.
BlackRock has been criticised for not using its considerable influence to tackle climate change. The company is present in dozens of countries and is often called the largest shadow bank in the world.