Stockholm (NordSIP) – Larry Fink, the outspoken CEO of the world’s largest asset manager, BlackRock, is a known advocate of sustainable investing. It is not unusual that his public opinions reverberate throughout the investment community, and his somewhat controversial remarks during a Bloomberg interview earlier this month are no exception.
Fink’s main message appears that BlackRock and its peers in the asset management community should not be expected to act as “environmental police”. He implies that it is not the investors’ responsibility to ensure that their portfolio companies do their part to protect the planet.
“We are not going to support Scope 3 [disclosures] at this time,” states Flink. “I have no problem in doing Scope 1 and 2. But we have always said that Scope 3 is forcing big companies, banks, and asset managers to be the environmental police,” he explains, adding that he is plainly against it.
Commenting on the most recent proxy season, Flink says that BlackRock has not been as prescriptive as the year before simply because there are fewer issues this time. Companies have been volunteering more information, according to him.
“Let me be clear: energy companies are moving, and they are moving with a deep understanding,” claims an optimistic-sounding Flink. “And there is not an energy CEO who does not believe that we have climate risk, although they may disagree on the speed with which we could fix this,” he adds.
Not everyone agrees with his positive stance, however. “Fink’s suggestion that it’s OK for companies to ignore for now scope 3 emissions, which for most companies represent the majority of their emissions, is like him saying he’s OK with financial reports that include operating expenses but ignore the cost of goods sold. It doesn’t make sense in both cases,” writes Raz Godelnik, author of Rethinking Corporate Sustainability in the Era of Climate Crisis.
Taken at face value, many of Flink’s remarks seem to go against the recommendations of the IPCC and the multiple financial initiatives aimed at decarbonisation, such as the Net Zero Banking Alliance, of which BlackRock is also a part.
BlackRock’s CEO might be playing a dangerous game at a time when many big asset management firms’ ESG efforts are increasingly coming under scrutiny.