BlackRock CEO Larry Fink called on CEOs to confront environmental, social and governance factors (ESG) in a manner that is both "global and ambitious." He argued that the COVID-19 pandemic accelerated the anticipated reallocation of capital, pricing climate risk into the value of securities. While Mr. Fink characterized climate risk as an investment risk, he also stated that climate transition presents a "historic investment opportunity."
Mr. Fink said that there is no company whose model won't be "profoundly affected" by the transition to a net zero economy. He affirmed BlackRock's commitment to accelerate its data and analysis capabilities for investors to better prepare their portfolios for this climate transition.
In looking ahead, Mr. Fink urged companies to disclose (i) a plan for how their business model will be compatible with a net zero economy and (ii) how the plan will be incorporated into the long-term strategy and reviewed by the board of directors. Mr. Fink urged both public and private companies to issue such disclosures prior to regulators imposing them.
Mr. Fink stated that until a single, global standard for climate disclosure is established, BlackRock will continue to endorse the recommendations of the Task Force on Climate-related Financial Disclosures and the Sustainability Accounting Standards Board.
Commentary
President Biden issued an Executive Order directing federal officials to convert their various car fleets to "clean and zero-emission vehicles" (Jan. 27, 2021). One of the seeming effects of the Biden Order as to car fleets was to increase the stock prices of makers of electronic vehicles, such as Tesla, providing a very practical demonstration of legal changes that amplify the investment opportunities highlighted by Chair Fink.
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