BlackRock's Fink says investors demand sustainable strategies

BOSTON (Reuters) – Companies that do not adopt sustainable business strategies can expect less investment as shareholders grow more focused on topics like climate change, BlackRock Inc CEO Laurence Fink said on Thursday.

Fink said he has been telling corporate boards they will see “money moving in to more sustainable strategies. And if you’re not part of that construct you’re just going to see less equity demand for your shares.”

Fink, head of the world’s largest asset manager, spoke during a climate finance conference hosted by the Institute of International Finance, which was webcast.

Fink has made similar comments in the past but a recent report from Morningstar Inc showed how investors have followed his description, with BlackRock iShares ETFs taking in nearly half of the $51 billion in net new deposits that U.S. sustainable funds received in 2020. The latter figure was almost a quarter of total U.S. fund flows.

Fink said he does not support the divesture of companies with high carbon emissions, as some have urged, since the companies could still operate. “To me that’s greenwashing,” he said, adding that “If a public company sells off a lot of their hydrocarbon business to a private entity, the world doesn’t change.”

Fink said other CEOs have grown more accepting of the annual letters he sends at the start of each year focused on principles like identifying their corporate purpose and disclosing climate risks.

Four years ago his message on corporate purpose got what he called “pushback” from about 40% of recipients, he said. For this year’s letter stressing climate matters, he said, the pushback level was “probably less than ten” percent.

“We’re not making these statements as an environmentalist – I happen to be one – but we’re making the statement that this is investment risk,” Fink said.

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