Indeed, climate change is almost invariably the top issue that clients around the world raise with BlackRock. Investors are increasingly reckoning with these questions and recognizing that climate risk is investment risk. Will cities, for example, be able to afford their infrastructure needs as climate risk reshapes the market for municipal bonds? What will happen to the 30-year mortgage – a key building block of finance – if lenders can’t estimate the impact of climate risk over such a long timeline, and if there is no viable market for flood or fire insurance in impacted areas? What happens to inflation, and in turn interest rates, if the cost of food climbs from drought and flooding? How can we model economic growth if emerging markets see their productivity decline due to extreme heat and other climate impacts? Research from a wide range of organizations – including the UN’s Intergovernmental Panel on Climate Change, the BlackRock Investment Institute, and many others, including new studies from McKinsey on the socioeconomic implications of physical climate risk – is deepening our understanding of how climate risk will impact both our physical world and the global system that finances economic growth.
The evidence on climate risk is compelling investors to reassess core assumptions about modern finance. But awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance. Last September, when millions of people took to the streets to demand action on climate change, many of them emphasized the significant and lasting impact that it will have on economic growth and prosperity – a risk that markets to date have been slower to reflect. And we have a deep responsibility to these institutions and individuals – who are shareholders in your company and thousands of others – to promote long-term value.Ĭlimate change has become a defining factor in companies’ long-term prospects. It belongs to people in dozens of countries trying to finance long-term goals like retirement.
He also warns boards that climate change has become a defining factor in companies’ long-term prospects.ĭear CEO, A Fundamental Reshaping of FinanceĪs an asset manager, BlackRock invests on behalf of others, and I am writing to you as an advisor and fiduciary to these clients. In his 2020 letter Fink says that climate risk is compelling investors to reassess core assumptions about where they invest their money, and that his firm is preparing to place sustainable investing at the centre of its investment approach. Blackrock had $7 trillion of assets under management in the third quarter of 2019, so its leverage is significant. They need more purpose, and deliver more impact. Today Fink publishes his annual letter for 2020, again warning CEOs that profit-making is not enough, and that in today’s world of broader social and environmental challenges, businesses need to do more.
Larry Fink’s 2018 Letter to CEOs: A Sense of Purpose.This was not another anti-capitalist or environmental lobbyist saying that business needed to change, it was the boss of the world’s largest investment management firm. Recode 5: Leadership Recoded: Management, Courage, Performance, TransformationīlackRock’s Larry Fink sends his 2020 Letter to CEOs … Climate change, sustainable investing, and “a fundamental reshaping of finance” January 14, 2020Įxactly two years ago today, Larry Fink, Chairman and CEO of Blackrock, wrote a letter to many of the world’s business leaders – CEOs of companies who looked to his business for investment.Recode 4: Work Recoded: People, Organisations, Agility and Transformation.Recode 3: Innovation Recoded: Creativity, Design, Innovation, Business Models.Recode 2: Growth Recoded: Strategy, Markets, Brands, and Customers.Recode 1: Future Recoded: Change, Purpose, Vision, and Scenarios.
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