London Daily

Focus on the big picture.
Tuesday, Feb 17, 2026

Here's how the world's largest money manager is overhauling its strategy because of climate change

Here's how the world's largest money manager is overhauling its strategy because of climate change

“Climate change has become a defining factor in companies’ long-term prospects,” BlackRock CEO Larry Fink said Tuesday in his annual letter to company executives.

The world’s largest money manager said that it will roll out a number of new product offerings that focus on sustainable investing.

“Clients are now asking us more and more questions about climate change,” Fink said Tuesday on CNBC’s “Squawk Box.”

“As the largest investment firm in the world, it was very clear to me that more and more clients are looking for advice from us,” Fink said. “Probably the most important inference from my observations is I believe we are just beginning a major reallocation of capital.”

BlackRock is overhauling its investing strategy to make sustainability the “new standard for investing,” which will include launching new active and passively-managed funds that focus on socially responsible investing.

In his highly anticipated annual letter to company executives, BlackRock CEO Larry Fink said that a “fundamental reshaping of finance” is underway as issues like climate change “become a defining factor in companies’ long-term prospects.”

Fink argues that sustainable-focused investing strategies make sense not just from a social perspective, but an economic one. Climate change poses a real risk to long-term viability, and companies can no longer afford to ignore these risks.

BlackRock is the world’s largest money manager -at the end of 2019′s third quarter it had nearly $7 trillion in assets under management -which means that the company’s policies have significant reach. But BlackRock’s sheer size is also in some respects limiting. Since the company offers exchange-traded funds that track the S&P 500, for example, it’s difficult to unilaterally sell stocks of companies that engage in activities that might not align with a customer’s values.

This is not the first time Fink has used his annual letter to push for change. In 2018 he said that companies must focus on more than just making money, and in 2019 he argued that companies need to take positions on societal issues.

This time around, his letter feels more immediate, since the company also announced a host of new initiatives, including doubling its exchange traded funds, or ETF’s, that focus on companies’ environmental, social and governance factors, or ESG. The firm is also moving away from thermal coal companies.

“Because sustainable investment options have the potential to offer clients better outcomes, we are making sustainability integral to the way BlackRock manages risk, constructs portfolios, designs products, and engages with companies,” the firm’s global executive committee, which includes Fink, wrote in its letter to clients Tuesday. “We believe that sustainability should be our new standard for investing.”

BlackRock already offers sustainable investing strategies, but its new products are designed to make it even easier for investors to choose socially responsible funds.

“We want to make sustainable investing more accessible to all investors and lower the hurdles for those who want to act,” the letter said.


Sustainable-focused portfolios


BlackRock said that beginning this year, it will offer sustainable versions of its flagship portfolios, with the eventual goal being to make the sustainable option the “flagship” offering.

Instead of optimizing for market cap-weighted exposure, these funds will instead focus on ESG-optimized exposure.

The company also plans to expand its offerings of sustainability-focused passive funds, as well as its impact investing arm. This includes its Global Impact Equity fund, which is set to launch this quarter.

“Clients are now asking us more and more questions about climate change,” Fink said Tuesday on CNBC’s “Squawk Box.”

“As the largest investment firm in the world, it was very clear to me that more and more clients are looking for advice from us,” Fink said. “Probably the most important inference from my observations is I believe we are just beginning a major reallocation of capital.”


Doubling down on ESG


BlackRock said that stocks and other assets are already evaluated through an ESG-lens, but announced that these factors will play a greater role in the decision-making process.

ESG risk will be evaluated “with the same rigor” as “traditional measures such as credit and liquidity risk.” As ESG-focused investing has grown in popularity so, too, have critics of the style, who argue that the inherently subjective nature means there’s little accountability.

BlackRock said that portfolio managers will be accountable for “documenting how those considerations have affected investment decisions,” noting that it’s part of a wider push to be more transparent.

“By the end of 2020, we intend to provide transparent, publicly available data on sustainability characteristics – including data on controversial holdings and carbon footprint – for BlackRock mutual funds,” the firm said.


Removing coal


As part of its stricter ESG strategy, BlackRock said it would move money away from high-risk sectors, including the thermal coal industry.

The company said it’s divesting from companies that generate more than 25% of their revenue from thermal coal production -or coal used for power production -from its actively managed portfolio, which it hopes to complete by the middle of 2020.

This extends to the firm’s alternative business, which BlackRock said will make no future direct investments in companies focused on thermal coal production.


New ETF offerings


To increase accessibility to sustainable products, BlackRock said that it will more than double its ESG-focused ETFs to 150 funds over the next few years.

This includes sustainable versions of the firm’s flagship index products, and there will also be options to screen out specific sectors entirely.

BlackRock also said that it will work with index providers “to promote greater standardization and transparency of sustainability benchmark methodology.”

Enhancing voter engagement
The firm said that it will step up its engagement with company management on sustainability-related factors, and that starting this quarter it will disclose shareholder voting on a quarterly rather than annual basis.

“On key high-profile votes, we will disclose our vote promptly, along with an explanation of our decision,” the management team said, while adding that it will “enhance the disclosure of our company engagements by including in our stewardship annual report the topics we discussed during each engagement with a company.”


Is it enough?


Some argue that BlackRock should have acted earlier, and that the company isn’t doing nearly enough since it continues to own oil and gas stocks, for example. But it’s also a change that could force others to follow suit.

Sunrise Project senior strategist Diana Best noted that BlackRock’s move “instantly raises the bar for competitors such as Vanguard and State Street Global Advisors.” Sunrise Project is a partner of BlackRock’s Big Problem, a website that calls out the firm for its investments in fossil fuels.

Despite the new sustainability-push, Fink made it clear that the firm will continue to buy controversial areas of the market.

“Under any scenario, the energy transition will still take decades. Despite recent rapid advances, the technology does not yet exist to cost-effectively replace many of today’s essential uses of hydrocarbons,” he said. “We need to be mindful of the economic, scientific, social and political realities of the energy transition. Governments and the private sector must work together to pursue a transition that is both fair and just – we cannot leave behind parts of society, or entire countries in developing markets, as we pursue the path to a low-carbon world.”

Newsletter

Related Articles

0:00
0:00
Close
UK Markets Signal Opportunity as Starmer Confronts Intensifying Political Pressure
Trump Criticises Newsom’s UK Climate Pact, Defends Federal Authority Over Foreign Engagements
UK’s Top Prosecutor Says ‘No One Is Above the Law’ as Police Review Claims Against Ex-Prince Andrew
Businessman Adam Brooks weighs in on the reports that the US is set to help Hamit Coskun flee the UK, over free speech concerns
U.S. Attorney General Pam Bondi Releases 3.5 Million Pages of Jeffrey Epstein Case Files
US Secretary of State Marco Rubio Comment on European allies report blaming Russia for killing late Kremlin critic Alexei Navalny using toxin from poison dart frogs
Eighty-Year-Old Lottery Winner Sentenced to 16.5 Years for Drug Trafficking
UK Quran Burner May Receive Asylum in the US Amid Legal Challenges
Rubio Calls for Sweeping U.N. Reform, Saying It Has Failed to End Wars in Gaza and Ukraine
10,000 Condoms Distributed at Winter Olympics 2026 Athlete Village Depleted Within 72 Hours
Poland's President Advocates for Evaluating Independent Nuclear Weapons Development
Prince William Meets Saudi Crown Prince as Epstein-Andrew Fallout Casts Shadow
Starmer Calls for Renewed ‘Hard Power’ Investment at European Security Summit
UK Police Establish National Taskforce to Handle Domestic Epstein-Linked Allegations
UK Court Rules Ban on Palestine Action Unlawful in Major Free Speech Test
UK Faces Prospect of Net Migration Turning Negative as Economic Impact Looms
Mayor of Serdobsk in Russia’s Penza Region Resigns After Housing Certificates Granted to Migrant Family Trigger Public Outcry
Pentagon Reviews Anthropic Partnership After Claude AI Reportedly Used in Operation Targeting Nicolás Maduro
President Donald Trump and Hip-Hop’s Political Realignment: Pardons, Public Endorsements, and the Struggle Over Cultural Influence
China’s EV Makers Face Mandatory Return to Physical Buttons and Door Handles in Driver-Distraction Safety Overhaul
Goldman Sachs and DP World Executive Resignations: Elite-Reputation Risk and Corporate Governance Fallout From the Epstein Disclosures
‘Amelia’: The UK Government’s Anti-Extremism Game Villain Who Became a Protest Symbol
Peter Mandelson Asked to Testify Before US Congress Over Jeffrey Epstein Links
Walmart's Earnings and UK Economic Data Highlight Upcoming Financial Trends
UK Green Party Considering Proposal to Legalize Heroin for an Inclusive Society
SpaceX's New Vision: Lunar City Takes Precedence Over Mars Colonization
OpenAI and DeepCent Superintelligence Race: Artificial General Intelligence and AI Agents as a National Security Arms Race
Document Suggests Prince Andrew Shared UK Briefing on Afghan Investment Opportunities with Jeffrey Epstein
We will protect them from the digital Wild West.’ Another country will ban social media for under-16s
McDonald's Shortens Breakfast Hours in Australia Due to Egg Shortage
Heineken announces cut of 6,000 jobs due to declining beer demand
Beijing Brands UK Hong Kong Visa Expansion ‘Despicable and Reprehensible’ After Jimmy Lai Sentencing
Tesco Chief Warns UK Is ‘Sleepwalking’ Toward a Joblessness Crisis
Trump’s ‘Act of Great Stupidity’ Comment on UK Chagos Deal Reverberates Through Diplomacy and Strategy
New U.S. filings say Jeffrey Epstein repaid Les Wexner one hundred million dollars after theft allegation
Commerce Secretary Howard Lutnick acknowledges 2012 visit to Jeffrey Epstein’s private island as lawmakers scrutinise past ties
Helsing and Stark Defence loitering-munition drones and Germany’s race to industrialise battlefield autonomy
UK orders deletion of Courtsdesk court-data archive, reigniting the fight over who controls public justice records
UK Police Review Fresh Claims Involving Prince Andrew as Senior Royals Respond to Epstein Files
Keir Starmer’s Premiership Faces Unprecedented Strain as Epstein Fallout Deepens
Starmer Vows to Stay in Office as UK Government Faces Turmoil After Epstein Fallout
China and UK Signal Tentative Reset with Commitment to Steadier, Professionally Managed Relations
UK Confirms Imminent Increase in ETA Fee to £20 as Entry Rules Tighten
UK Signals Possible Seizure of Russia-Linked ‘Shadow Fleet’ Tanker in Escalation of Sanctions Enforcement
Epstein Scandal Piles Unprecedented Pressure on UK Prime Minister Keir Starmer’s Leadership
UK’s ‘Most Romantic Village’ Celebrates Valentine’s Day and Explores the Festival’s Rich History
The Implications of Expanding Voting Rights to Non-EU Foreign Residents in France
Ghislaine Maxwell to Testify Before US Congress on February 9
Al.com Acquired by Crypto.com Founder for $70 Million
Apple iPhone Lockdown Mode blocks FBI data access in journalist device seizure
×