Thread by @BLKsBigProblem

By now you've seen the news: BlackRock made a major climate announcement this week.

But what does it mean?

What's the good, the meh, and the missing for #ClimateAction and our work to #StopTheMoneyPipeline?

We lay out out here -> blackrocksbigproblem.com/post/our-in-de…

& in this🧵1/

tl;dr: It's a major shift for BlackRock, which previously had failed to take meaningful action on climate, and is a very important step in the right direction as the world faces increasing risk from climate change.

And BLK still has to do more cuz we're in a #climatecrisis! 2/

On to the details.

First announcement: Coal divestment.

BlackRock will move companies with 25% or higher revenue from thermal coal production out of all actively managed funds and all ESG funds.

What we like about this: Coal is dead! It's time BLK got with the program. 3/

Several questions remain about the coal exclusion.

Like, does this include coal-heavy utilities? What's the timeline for coal phase-out from ESG? And will BlackRock pressure companies at that 25% revenue line to ratchet down production, in line with the Global Coal Exit list? 4/

And BlackRock's coal exclusion, as laid out yesterday, should be stronger.

- The coal supply chain is long: gotta include the whole thing, and utilities are a different beast that need different treatment.

- The Global Coal Exit List is the gold standard - align with it!
5/

2nd announcement: Engagement and/or voting on climate.

What BlackRock announced:
- Priorities mapped with UN Sustainable Development goals
- Use performance indicators and clarify expectations
- Joined Climate Action 100+
- Increased transparency on voting & engagement
6/

What's good about this shift on engagement & voting:

- Improvements in transparency
- CA100+ membership good - if paired with specific action
- BLK is saying for first time it will vote out management w/o progress.
7/

Questions remain about how BlackRock will implement these changes in voting & engagement:
- Are there time-bound limits on engagement?
- Are there clear bright lines to determine when it's time to vote against management?
- What's the criteria for the priorities & guidelines? 8/

And a key thing was missing from the announcement on engagement & voting:

How will BlackRock push fossil fuel and fossil-adjacent companies to align operations with a net-zero world?
9/

Next up: ESG (environmental, social, governance - focused funds)
Commitments:
- all active funds ESG-aligned
- better ESG analysis
- more ESG offerings
- pushing others for more sustainable offerings
- carbon footprint disclosure on all funds

10/

These ESG changes are all good things! We still have questions:
- How does BLK define ESG? Does it align with Paris?
- How does it define "sustainability"?
- How will it protect against greenwashing?
- Will it aggressively market these funds to assure uptake?
11/

What BlackRock still needs to do on ESG:

- Give us guarantees this will truly be sustainable! A few months ago we found coal companies in a "low-carbon" fund.
- Actively push for consistent labeling across the industry.
12/

On climate risk disclosure, BlackRock committed to:
- Ask investees for info on: transition plans & social licenses to operate
- Engage with companies on climate-risk disclosure.

We like this most because it shows grassroots power is real power!
13/

Our big questions on the climate risk disclosure commitments from BlackRock:

- Will it work towards a universal disclosure framework which adequately assesses the real climate risk?
- How will it evaluate the transition plans of individual companies and under what criteria? 14/

What else BlackRock needs to do on disclosure:

- Lay out a plan to avoid greenwashing
- Insist on 1.5 degree Paris compliance, not just vague "climate risk"
- Disclose it's own climate risk! Not just of its operations, but of its entire portfolio.
15/

The last announcement from BLK: sustainable index investing.

Fink said he wants to create “Sustainability as Our Standard Offering” & fundamentally reshape finance, committed to offer sustainable versions of BlackRock flagship model portfolios, and hints at more. 16/

What we like: This has the potential to be huge for the climate!

17/

But the details on BlackRock's plans for sustainable index investing are vague.

What does this really mean in practice? And on what timeline?
/18

And what needs to change about BlackRock's plans for sustainable index investing?

- Actively encourage clients to move investments into these products!
- Name a goal of AUM in these products.
- Make fossil/coal/deforestation free funds the default for all clients!
19/

And finally, there are some BIG gaps in BlackRock's climate announcement.

First, capital must be rapidly shifted out of oil & gas, too!
20/

Second, what's BlackRock gonna do about deforestation and indigenous rights risks in its portfolio?

- Will it incorporate deforestation risk & indigenous rights into engagement & voting priorities?
- Will it establish an agribusiness and/or an indigenous rights policy?
21/

BlackRock has enormous lobbying power. Now that it has declared that sustainability is at the center of its operations, will it use its lobbying arm to ensure that these goals are possible and encouraged under U.S. (and other jurisdictions) law and regulation?

22/

And finally, BlackRock’s own disclosures.

Will BlackRock disclose its own exposure to climate risk across its entire set of portfolios, both active and index?

22/22