Pandemic Accelerates Climate Spending: Fink

US investment fund manager Larry Fink has told the CEOs of firms Blackrock invests in that the focus on climate mitigation has never been stronger than now, after the Covid-19 pandemic. Far from diverting attention from climate change, "the reallocation of capital accelerated even faster than I anticipated," he wrote in a letter January 25.

From January through November 2020, investors in mutual funds and exchange-traded funds invested $288bn globally in sustainable assets, a 96% increase over the whole of 2019. The creation of sustainable index investments has enabled a massive acceleration of capital towards companies better prepared to address climate risk, he said.

In his letter a year ago, he said that "climate risk is investment risk" and that as markets started to price climate risk into the value of securities, it would spark a fundamental reallocation of capital. This is now playing out, in his view.

He said that as "more and more investors choose to tilt their investments towards sustainability-focused companies, the tectonic shift we are seeing will accelerate further. And because this will have such a dramatic impact on how capital is allocated, every management team and board will need to consider how this will impact their company’s stock."

Most of the money BlackRock manages is for retirement – for individuals and pension beneficiaries like teachers, firefighters, doctors, businesspeople, and many others. "The trust our clients place in us, and our role as the link between our clients and the companies they invest in, gives us a great responsibility to advocate on their behalf," he said.