One of the nation’s largest financial firms announced Monday it would pull back from its investments in coal as investors increasingly recognize climate change as an investment risk.
“Climate change has become a defining factor in companies’ long-term prospects,” wrote Larry Fink, chairman and CEO of BlackRock, which manages investment portfolios including those used to fund retirement.
In a letter to clients, Fink said research “is deepening our understanding of how climate risk will impact both our physical world and the global system that finances economic growth,” pushing the firm to reevaluate various investments.
The company will make sustainability a key factor in its investment approach going forward, “exiting investments that present a high sustainability-related risk, such as thermal coal producers,” and offering investment portfolios that exclude fossil fuel companies.
Coal has rapidly been losing market share as utilities increasingly turn to renewables and natural gas. Data released Monday found coal-fired power plants have been closing at near-record pace, despite efforts from the Trump administration to prop up the struggling industry.
BlackRock’s announcement comes as green groups are putting increasing pressure on Wall Street to pull back from funding polluting industries, with a number of major groups launching a Stop The Money Pipeline campaign.
The letter, while noting a government role in the energy transition, largely mirrors environmentalists' messaging on financiers roles.
“In the near future – and sooner than most anticipate – there will be a significant reallocation of capital,” Fink writes. “As a fiduciary, our responsibility is to help clients navigate this transition.”