Investment giant BlackRock will spurn stocks that face climate risk

January 15, 2020
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Notably, it presents the move not as a matter of social responsibility but as driven by its belief that "sustainability-integrated portfolios can provide better risk-adjusted returns to investors." In particular, it (correctly) calls out coal producers as threatened by the energy transition and will cull them from its active portfolios, while moving to make environmental, social, and governance (ESG)-weighted funds its default offering for indexes. While the move will impact most firms only at the margins, BlackRock is world's largest investment manager, so even marginal moves can be quite significant. As investors focus on the issue, clients have yet another reason to proactively address risks climate change can pose to their business.

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