World's largest asset manager BlackRock to exit investments that present ‘high’ sustainability risk

BlackRock, the world's largest asset manager with nearly $7 trillion in client assets, is set to place sustainability at the center of its investment approach.

In his 2020 letter to corporate CEOs, Laurence D. Fink, chairman and CEO of BlackRock, said that climate risk is investment risk and is “almost invariably the top issue that clients around the world raise with BlackRock.”

Accordingly, the asset manager would begin exiting certain investments that “present a high sustainability-related risk,” such as thermal coal producers. “We are in the process of removing from our discretionary active investment portfolios the public securities (both debt and equity) of companies that generate more than 25% of their revenues from thermal coal production, which we aim to accomplish by the middle of 2020,” wrote the chairman.

BlackRock will also double the number of sustainability-focused exchange-traded funds or ETFs it offers to 150, per the letter. “Our investment conviction is that sustainability- and climate-integrated portfolios can provide better risk-adjusted returns to investors,” Fink wrote.

Fink’s move is seen as a “watershed” move and could put pressure on other asset managers such as Vanguard and JPMorgan to alter their investment strategies.