CEO Laurence ‘Larry’ Fink of BlackRock Inc., the world’s largest asset management company, wrote to CEOs on January 14, stating that the socioeconomic effects of physical climate risk call for “a fundamental reshaping of finance” that will pivot the industry focus to sustainable investing.

The New York-based investment management and technology provider, who in the third quarter of 2019 managed global assets of almost $7 trillion dollars, also informed clients that day that the company will help them to focus on building resilient, sustainable portfolios.

In 2020 BlackRock will offer sustainable variations of their flagship model portfolios, eschewing traditional market cap-weighted index exposures for environmental, social, and governance (ESG)-optimized index exposures that BlackRock expects to replace the old flagship models.

The strategy also reevaluates the company’s ongoing involvement in specific high-ESG risk sectors, such as decreasingly-viable thermal coal production as well as controversial weapons systems manufacturers.

Fink further clarified BlackRock’s commitment to transparency and investment stewardship. They have joined Climate Action 100+, a consortium of investors who help companies to improve environmental disclosure and adherence to the United Nations Framework Convention on Climate Change (UNFCC) 2015 Paris Agreement.

Further, BlackRock adheres to the Sustainability Accounting Standards Board (SASB) framework for reporting a company’s financially-material sustainability progress. The framework is provided by the SASB Foundation, which uses ESG reporting standards to bolster sharing of financially-material sustainability performances of companies for their investors.

To read BlackRock CEO Larry Fink’s letter to CEOs:

To read BlackRock’s letter to clients:

Written by Nicole Foulke