Invest
Global fund manager dumps thermal coal
In an open letter to clients, the world’s largest fund manager has said that it will be exiting its investments in thermal coal producers by the middle of 2020 as it shifts its focus to sustainable investment.

Global fund manager dumps thermal coal
In an open letter to clients, the world’s largest fund manager has said that it will be exiting its investments in thermal coal producers by the middle of 2020 as it shifts its focus to sustainable investment.

BlackRock’s global executive committee has penned the letter, which indicated the fund manager’s commitments to ESG and core belief that “sustainability should be our new standard for investing”.
And so, moving forward, sustainability will be the “standard offering” in all BlackRock solutions.
It noted that over the past few years, more and more of BlackRock’s clients have focused on the impact of sustainability on their portfolios.
This shift has been driven by an increased understanding of how sustainability-related factors can affect economic growth, asset values and financial markets as a whole.
For BlackRock, “the most significant of these factors today relates to climate change, not only in terms of the physical risk associated with rising global temperatures, but also transition risk – namely, how the global transition to a low-carbon economy could affect a company’s long-term profitability”.
It cited the stance taken by BlackRock chairman and CEO Laurence D. Fink in his 2020 letter – that the investment risks presented by climate change are set to accelerate a significant reallocation of capital, which will in turn have a profound impact on the pricing of risk and assets around the world.
As well as iterating a reduction of ESG risk in active strategies, BlackRock’s letter announced an intention by the group to exit thermal coal producers to reduce its exposure to what it has considered as a “high-risk sector”.
It outlined thermal coal as significantly carbon intensive, becoming less economically viable and highly exposed to regulation because of its environmental impacts.
“With the acceleration of the global energy transition, we do not believe that the long-term economic or investment rationale justifies continued investment in this sector,” it informed its clients.
Not only is BlackRock in the process of removing public securities of companies currently generating more than 25 per cent of their revenues from thermal coal – a process it aims to accomplish by the middle of this year – it will closely scrutinise other businesses it deems heavily reliant on thermal coal as an input, and will make no future direct investments in companies generating more than 25 per cent of their revenues from thermal coal production.
The fund manager outlined its stance that companies and investors have a meaningful role to play in accelerating the low-carbon transition.
“BlackRock does not see itself as a passive observer in the low-carbon transition,” the letter continued.
“We believe we have a significant responsibility – as a provider of index funds, as a fiduciary, and as a member of society – to play a constructive role in the transition,” the executive committee has noted.
nestegg recently published an op-ed on the issues around mining, politics and climate change currently facing Australia.
About the author

About the author


Mutual funds
Micro-investing: Is it worth it?
Investing can be complex. It involves making financial decisions on how your money is going to be invested and managed over time, as well as figuring out the right strategy for each investment. There...Read more

Mutual funds
RAIZ v Spaceship: Which is better value?
Raiz and Spaceship have become the two biggest apps in the micro-investing space, but which offers a better deal for Aussie investors looking for a hands-off savings strategy? ...Read more

Mutual funds
Sold your stocks during the dip last year? Here’s how much it might have cost you
If you cashed out during last year’s COVID-19 crash, here’s how much it might have cost you. ...Read more

Mutual funds
‘True to label’ warning again given to fund managers: ASIC
Consumers should be wary: Fund managers aren’t doing enough to ensure products are “true to label”, with a number of product names not aligning with underlying assets in those funds. ...Read more

Mutual funds
Move over, mainstream: ESG excels
Responsible investing is proving its worth in the investment game, beating out the total return of the S&P/ASX 300 over the last decade. ...Read more

Mutual funds
ASIC makes frozen funds easier to access
A new relief measure will enable investors suffering hardship to access their investment money even where managed funds have been “frozen” to maintain fund stability through the COVID-19 pandemic....Read more

Mutual funds
Is it time to put a food-style label on investment products?
Much like the food people eat, investors are being told they need to know what they are buying before purchasing exchange-traded products, as many are unaware of the ramifications if they don’t. ...Read more

Mutual funds
Why you should think about ESG investing this World Environment Day
Today marks World Environment Day, with experts using the occasion to flag how Aussies can benefit by investing in a way that helps the planet. ...Read more

Wrapping up an eventful 2021
Listen now

What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now

Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now

Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now

Mutual funds
Micro-investing: Is it worth it?
Investing can be complex. It involves making financial decisions on how your money is going to be invested and managed over time, as well as figuring out the right strategy for each investment. There...Read more

Mutual funds
RAIZ v Spaceship: Which is better value?
Raiz and Spaceship have become the two biggest apps in the micro-investing space, but which offers a better deal for Aussie investors looking for a hands-off savings strategy? ...Read more

Mutual funds
Sold your stocks during the dip last year? Here’s how much it might have cost you
If you cashed out during last year’s COVID-19 crash, here’s how much it might have cost you. ...Read more

Mutual funds
‘True to label’ warning again given to fund managers: ASIC
Consumers should be wary: Fund managers aren’t doing enough to ensure products are “true to label”, with a number of product names not aligning with underlying assets in those funds. ...Read more

Mutual funds
Move over, mainstream: ESG excels
Responsible investing is proving its worth in the investment game, beating out the total return of the S&P/ASX 300 over the last decade. ...Read more

Mutual funds
ASIC makes frozen funds easier to access
A new relief measure will enable investors suffering hardship to access their investment money even where managed funds have been “frozen” to maintain fund stability through the COVID-19 pandemic....Read more

Mutual funds
Is it time to put a food-style label on investment products?
Much like the food people eat, investors are being told they need to know what they are buying before purchasing exchange-traded products, as many are unaware of the ramifications if they don’t. ...Read more

Mutual funds
Why you should think about ESG investing this World Environment Day
Today marks World Environment Day, with experts using the occasion to flag how Aussies can benefit by investing in a way that helps the planet. ...Read more