Larry Fink, from his perch as head of the world’s largest asset manager, has challenged companies to help the world reach “net zero” greenhouse gas emissions.
In his annual letter to fellow CEOs and in a virtual appearance at Davos, Fink called on them to create and make public their plans for meeting this climate objective.
In 2020, “a pivotal year, we saw an extraordinary shift in how investors invested across every industry,” as they shunted money into sustainability endeavors, he told a panel at the Worldwide Economic Forum in the famed Swiss town. When the pandemic struck last March, many expected investing interest in climate opportunities to lag, he said. Instead, he added, it surged 96%.
For Fink, net zero means eliminating net greenhouse gas emissions by 2050, achieved by limiting global warming to no more than 2 degrees Celsius above preindustrial averages. Last year, he roiled the corporate world with his letter telling his peers to improve their commitment to sustainability goals, warning them that BlackRock would dump stocks where management didn’t go along.
The chief of BlackRock (assets under management: nearly $9 trillion) highlighted a Davos panel on stakeholder capitalism—a concept he also championed in his CEO letter last year. This means broadening the purpose of corporations beyond shareholder return to employees and the world at large. And environmental goals are a big part of that notion.
Failing to meet investors’ increasingly green expectations will lead to “a widening gap” between companies that meet those preferences and those that don’t, he warned.
Another CEO on the Davos panel, Saleforce’s Marc Benioff, lauded the contribution of companies to fight the coronavirus and to build a more environmentally friendly world. “CEOs are the heroes,” he said. “Governments didn’t save us.” Businesses were the providers of personal protective equipment and the developers of the vaccines, he stated.
Meeting sustainability goals will cost $6 trillion a year, said Brian Moynihan, Bank of America’s CEO. “And the only way you’ll do that is if private companies are driving it.” Moynihan declared that his giant bank has helped its employees during the pandemic by boosting their health care coverage and ensuring branch workers, who deal with the public, are protected.
Measuring how companies follow the ideals of environmental, social, and governance (ESG) investing is crucial, he said. The BofA chief lauded the Davos forum’s 21 new ESG metrics, created in partnership with the four accounting firms, plus 62 companies, with the goal of providing transparency.
Fink’s BlackRock has been focused more and more on challenging corporate boards that it thinks haven’t measured up to ESG ideals and stakeholder concerns. Last year, the firm voted against 69 companies and against 64 directors for climate-related reasons, and it placed 191 companies “on watch.”