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BlackRock Sees Major Increase in Climate Commitments This Decade

Emissions from a chimney alongside cooling towers of the Eskom Holdings SOC Ltd. Matla coal-fired power station in Mpumalanga, South Africa on Monday, March 21, 2022. A South African court ordered the government to take measures to improve the air quality in a key industrial zone, saying it had breached the constitution by failing to crack down on pollution emitted by power plants operated by Eskom and refineries owned by Sasol Ltd.

(Bloomberg) —

BlackRock Inc. expects commitments to curb greenhouse-gas emissions will rise significantly by 2030, with most of its assets invested in companies and sovereign debt issuers that have specific targets for arresting global warming.

In the first public estimate of its kind by the world’s biggest asset manager, BlackRock said Thursday that the share of its assets invested in corporations and sovereign governments with science-based targets will rise to 75% by the end of the decade from 25% now. 

BlackRock, with almost $10 trillion of assets under management, had about $1.8 trillion of investments meeting that description as of Sept. 30. The latest projection also reflects a major change in investor demands, with clients citing the transition to a net-zero economy as a top concern and a rapidly growing number of them wanting their portfolios aligned to the goal.

“Because an orderly transition to net-zero by 2050 would benefit the global economy and our clients in aggregate, we believe that by 2030, all issuers would benefit from developing and implementing robust transition plans,” the firm said in an emailed statement.

Companies, scientists and governments have set 2030 as a key milestone in the transition to achieving a net-zero global economy by mid-century. Advocates of science-based targets say they’re essential because they lay out clear plans to reduce emissions in line with the Paris climate goals of limiting global warming to less than 2 degrees Celsius above pre-industrial levels and pursuing efforts to limit warming to 1.5 degrees.

The transition may be bumpy for investors, with the war in Ukraine and resulting spike in energy prices underscoring the challenges, BlackRock said. The firm will continue to invest in carbon-intensive companies and doesn’t support a policy of divestment, which could make an orderly transition even more difficult, according to the statement.

BlackRock is part of a group called the Net Zero Asset Managers Initiative, which pledged to reduce greenhouse-gas emissions by 2050. 

Read more: Net Zero Asset Managers Fall Short of Targets Set by Scientists 

But some signatories that set targets may have already failed their first real test. That’s well below the 50% identified by scientists as critical to reaching 2050 goals.

Other signatories include Vanguard Group, Allianz Global Investors and Brookfield Asset Management.© 2022 Bloomberg L.P.