In the 1980s and 90s there used to be an TV commercial for the brokerage house E.F. Hutton that ended with the catch phrase “when E.F. Hutton talks, people listen…”. Likewise, today when Black Rock Capital CEO (who oversees financial investments and assets in excess of $4 Trillion) writes a letter to corporate CEOs the entire world of business sits up and takes notice. Last week CEO Larry Fink signaled in his annual missive that his firm will place environmental sustainability at the very core of their investment strategy. With the backdrop of recent large-scale weather events like the fires in the Amazon and in Australia this announcement by the world’s largest single investor might signal the business world is finally getting serious about the environment and its importance to the welfare of society.
Larry Fink writes that climate change has put us on the “edge of a fundamental reshaping of finance” BlackRock is one of many high-profile firms from the European Investment Bank to Goldman Sachs have declared that they will stop lending to fossil fuel projects altogether. Investors have enormous clout in deciding what projects get funded and promoted in the market. Downplaying high carbon footprint businesses might very well hasten their demise. The New Yorker contributor Bill McKibben a well-known environmental activist calls this change “seismic” and further speculates that perhaps the financial industry is yielding to pressure from activists, employees and even individual investors.
Black Rock joins the fast-growing Climate Action 100+ Initiative – an interest group that lobbies businesses to pay greater attention to the climate crisis. This group was formed at the heel of the Paris Climate Accord in 2015 now has signed on companies that together influence $35 Trillion in worldwide investment. This is an extremely promising sign that change in underway and likely to speed up. To which our reaction is “it’s about time guys!”
This is a classic case of public sentiment, the media, suppliers, partners, employees and concerned scientists forcing change in business practices in the 21st century. It is a small but important victory for stakeholder capitalism.