BlackRock announced last week that by 2030, at least 75% of the corporate and sovereign assets it manages on behalf of clients will be in issuers with science-based targets for climate change.
This commitment, coming from the world’s largest asset manager, could have a significant impact on reducing global emissions. However, whether BlackRock adopts criteria to ensure that the heavy emitters in its portfolio are clearly included by the aim will determine the target’s real impact.
“We believe investors and issuers that take a forward-looking position with respect to climate risk and its implications for the energy transition will generate better long-term financial outcomes,” according to BlackRock. “Climate risk and the economic opportunities from the transition are a top concern for our clients and a rapidly growing share of them have already committed to net-zero aligned portfolios.”
The company, on the other hand, stated that there are no plans for a broad divestment from carbon-intensive industries and that it expects to remain a long-term investor in those assets, explaining that divesting of such industries in the short run may be at odds with facilitating the transition to a net-zero economy in the long term.
BlackRock isn’t the only one who sees carbon-intensive assets as essential to the transition.
The Asian Development Bank (ADB) launched an energy transition mechanism (ETM) with Indonesia and the Philippines in November 2021 as part of its goals to reduce greenhouse gas emissions (GHG). Under the scheme, ADB will buy and operate existing coal-fired power plants before retiring them earlier than their originally projected lifespans. At the same time, the ADB will invest in renewable energy to replace electricity generation.
According to the Asian Development Bank at the time, fully implementing the ETM in Indonesia, the Philippines, and Vietnam could result in the retirement of half of the coal fleet in the next 10 to 15 years.