Business is booming.

Unpicking Larry Fink’s latest letter


This article is an on-site version of our Moral Money newsletter. Sign up here to get the newsletter sent straight to your inbox.

Visit our Moral Money hub for all the latest ESG news, opinion and analysis from around the FT

It’s been two years since BlackRock chief executive Larry Fink set corporate alarm bells ringing with a promise that the world’s biggest asset manager would no longer invest in companies that ignored climate threats. Since then, the amount of capital flowing into sustainable funds has surged — as has BlackRock’s own clout, with more than $10tn now under management. Yet, in his latest annual letter to company bosses, published yesterday, Fink was careful to stress the limits of what investor pressure could achieve without serious climate action from governments.

“Businesses can’t do this alone,” Fink said. “We need governments to provide clear pathways and a consistent taxonomy for sustainability policy, regulation, and disclosure across markets.” His warning came amid delays and haggling around climate disclosure regulations in Europe, while the shape of equivalent rules in the US is still more unclear. And in his protestation that stakeholder capitalism was not “woke”, he nodded to the culture wars that are undermining political momentum on climate issues, particularly in the US.

Still, Fink increased the pressure on big companies to help drive the energy transition as he urged “bold incumbents” to get involved in disrupting their own industries, rather than leave the playing field to start-ups.

There was a pronounced emphasis on social issues, too. This week, Edelman’s latest global Trust Barometer showed that respondents had more faith in businesses than in governments, non-governmental groups or the media. And, as we noted last week, pressure is growing on companies to take a stand on contentious political issues. “In this environment, facts themselves are frequently in dispute, but businesses have an opportunity to lead,” Fink wrote.

Fink’s critics — who include his former head of sustainable investing, Tariq Fancy — were broadly unimpressed by the letter. They noted that, unlike some previous editions, it contained no new policies to reduce BlackRock’s environmental impacts. In particular, they criticised his position on natural gas, which Fink argued would continue to play “an important role” during the energy transition. “There’s not much to see here other than more hot air from a would-be climate leader,” said Ben Cushing of the Sierra Club, calling the letter “just another rehashing of the same vague rhetoric”.

For now, Fink is sticking to his guns, dismissing calls for wholesale fossil fuel divestment by arguing this would simply push assets into the private markets. BlackRock and its peers “cannot be the climate police” in the absence of serious government policy, he wrote.

That debate is set to rumble on as one of the hottest issues of the year in sustainable business and finance. Read on for fresh takes on two of the others — energy inflation and international climate finance — and a curious new development in Australia’s embattled coal industry. And for more thought-provoking fodder on some of the key sustainability issues, check out two big FT special reports published today, on responsible business education and on the state of the world in 2022. See you on Friday. — Simon Mundy

When should business take a stand?

Our next Moral Money Forum report will explore one of the most contested questions in modern capitalism: when — and how — should companies speak out on environmental, social and political issues?

There are growing expectations that business should lead on matters that were once the preserve of governments, and public support for corporate activism is stronger than ever. But the perils of speaking out on issues from voting rights in the US to human rights in China are also clear: what some consumers, employees or investors see as the right stance may prompt a costly backlash from others.

We want to hear how Moral Money readers are adapting to the new demand for “corporate political responsibility”. The thoughts you share in this survey will inform our reporting.

Surging inflation: the death knell for central banks’ climate concern?

Christine Lagarde, president of the European Central Bank
Christine Lagarde, president of the European Central Bank © AFP via Getty Images

The numbers are startling: on both sides of the Atlantic, inflation in the world’s rich economies has hit a 25-year high. Combating inflation is the sole mandate for many central banks, so the new price problems put pressure on the banks’ plans to attack climate change, possibly with green asset purchases.

Evidence suggests the European Central Bank already might be leaning away from Christine Lagarde’s exploration of “every avenue available in order to combat climate change”. Isabel Schnabel, the ECB executive responsible for market operations, told our colleague Martin Arnold this month that the planned transition away from fossil fuels to a greener low-carbon economy “poses measurable upside risks to our baseline projection of inflation over the medium term”.

With inflation and climate progress seemingly on a collision course, Generation Investment Management, the sustainable investment firm co-founded by Al Gore, on Tuesday published new research suggesting that green energy might not be inflationary. For example, the cost of fossil fuel production is going to increase since easy access to oil and natural gas is getting harder to find. But once installed, “renewable energy never runs out” — once a windmill is in the ground, its owner does not need to hunt down stronger and stronger winds.

Already, the costs to produce renewable energy have dropped significantly in recent years, largely due to technological improvements, Generation argued.

Central bankers are well aware that inflation will not die down quickly, but neither will the climate crisis. If green bond-buying is to become a reality, the ECB and other central bankers will need to adopt some of Generation’s arguments to push back against sceptics who were always cool to the idea of adding a social purpose to price stability mandates. (Patrick Temple-West)

A new model for emerging market finance?

How can you fill a $2.5tn hole? That is the question that has been vexing global policymakers in recent months, as it has become clear that emerging markets are in desperate need of funding to implement an energy transition and uphold other development goals. But the money has so far been missing.

That is not because the developed world private sector lacks cash. Instead, the problem is that lenders are reluctant to back EM projects because of credit risks, multilateral development banks cannot supply the money on their own, and efforts to create so-called blended finance projects around the Sustainable Development Goals — or private sector loans with a public sector guarantee — have largely come to naught. Hence the estimated $2.5tn annual gap for SDG goals.

Now, a Dutch venture is stepping forward to test a fourth possible route: co-investment structures. APG, the largest pension fund in the Netherlands, announced this week it would invest $750m in a new private credit fund focused on emerging markets, which is being organised by the Amsterdam-based fund management group ILX.

This aims to use the funds collected from pension funds to co-invest alongside multilateral development banks (MDBs) and other development finance institutions (DFIs) in projects linked to the SDGs.

The details of this may not sound too thrilling to voters (or politicians). But the structure is striking. The organisers hope that if private sector players co-invest alongside MDBs, this will enable them to piggyback off the multilateral institutions’ project sourcing and implementation skills and thus channel funds to emerging markets more efficiently and flexibly than with blended finance structures. The plan should enable pension funds to get investment projects that are SDG compliant, and to benefit indirectly from the high ratings that MDBs attract — while earning steady, albeit not spectacular, returns. Or so the hope goes.

“Private capital and the MDBs must find a way to work together,” said Manfred Schepers, a former luminary at the European Bank for Reconstruction and the founder of the ILX initiative. “The assets that the MDBs do are totally investable, only the business model has not been set up to do such. So very little progress has been made mobilising private capital to enable the MDBs to scale.”

Can it work? It may not be simple. As Schepers said, it is currently hard for private investors to assess which MDB projects would produce returns, since “the research and data on emerging markets cannot be found on Bloomberg, the MDBs have it”. Still, what could provide momentum is the hunger that pension funds now have for SDG-compliant projects, to satisfy their own customers. And ILX plans to use the emerging markets credit data base known as GEMS to plug the data gap, which should offer more comfort to the staid institutions. All eyes on the Dutch. (Gillian Tett and Kristen Talman)

Chart of the Day

Column chart of % of people who say that these institutions are... showing Government and media seen as divisive

Edelman’s annual Trust Barometer contained some striking findings this year, with business considered more trustworthy on a range of issues than governments and media. Here’s the chart that especially caught our eye: whereas respondents tended to consider their own governments a source of division, businesses were viewed as a unifying force. The survey polled over 36,000 people in 28 countries.

Tips from Tamami

Tamami Shimizuishi

Nikkei’s Tamami Shimizuishi helps you stay up to date on stories you may have missed from the eastern hemisphere.

How do you find insurance if no insurer wants to work with you?

Australia’s coal industry is looking at self-insurance as a possible solution, as major insurers have walked away from the industry in droves amid global efforts to reduce emissions.

Businesses in the sector are now looking at the option of creating their own “captive” insurance companies — a prospect that has sparked alarm among some activists and investors.

“Captive insurers might enable coal companies to continue coal mining when many of the biggest insurers have decided that is against the goals of the Paris Agreement”, said Nick Holmes, a former managing director and head of insurance at Société Générale Corporate & Investment Banking.

The coal industry’s access to insurance is shrinking rapidly. The Adani Group’s Carmichael coal mine, which has just started to export coal to India after years of mass opposition, has been shunned by more than 40 major insurers. A contractor of the mine also failed to obtain insurance, our colleague in Sydney, Jamie Smyth, reported last year.

In December 2021, an Australian parliamentary inquiry concluded that the government should work with the resources sector to set up a self-funding insurance model, which the opposition Labor and Green parties immediately opposed.

“Government underwriting for an insurance mutual would not only deepen the climate crisis but also expose the Australian public to enormous financial risk,” said Christian Slattery, campaigner for environmental group Market Forces.

Smart Reads

  • ESG-focused funds face a more uncertain outlook in 2022, as pressures mount from research costs and hits to the big growth stocks that have helped power the investments’ outperformance, the FT’s Adrienne Klasa reports. ESG inflows surged throughout 2021, even as they slowed in pace towards the end of the year, according to data provider Morningstar.

  • European energy policy has focused on environmental sustainability and social impact while neglecting security concerns, argues Constanze Stelzenmüller of the Brookings Institution. Now, facing an increasingly hostile Russia, it is paying the price, she writes.

  • In this stimulating extract from his new book Davos Man, New York Times journalist Peter S. Goodman describes billionaires publicly preaching about stakeholder capitalism, while deploying sharp tax practices “that starved the system of resources”.

Scoreboard — Key news and analysis behind the business decisions in sport. Sign up here

Energy Source — Essential energy news, analysis and insider intelligence. Sign up here

Source link

  1. says

    Took me time for you to check out all the notes, but I truly enjoyed the post. It proved to be in actual fact helpful to me and I’m sure to all of the commenters right here! It’s usually great when you can not just be informed, but additionally engaged! I’m certain you had enjoyable writing this write-up.

  2. says

    I had this page saved a while previously but my computer crashed. I have since gotten a new one and it took me a while to find this! I also really like the template though.

  3. says

    So informative site! Big thanks! Thanks for a great time visiting your site. Its really a pleasure knowing a site like this packed with great information. Thank you!

  4. Agregator RSS says

    Very good day, this is the really superb website, I’ve plummeting in adore studying many of the posts and threads contained after the location, sustain the nice work as well as hope to learn a lot more exciting articles from the time to come.

  5. says

    My bro bookmarked this web publication for me and I have been going through it for the past several hours. This is really going to help me and my classmates for our class project. By the way, I like the way you write.

  6. osg777 says

    It’s hard to find knowledgeable people on this topic, however, you seem like you know what you’re talking
    about! Thanks

  7. 메이저사이트 says

    Saved as a favorite, I like your website!

    Here is my site … 메이저사이트

  8. Bitcoin today says

    Very good article. I absolutely appreciate this site.
    Keep it up!

  9. магазин спецодежды в москве says

    Производитель спецодежды в Москве магазин спецодежды в москве – купить оптом спецодежду.

  10. 먹튀검증 says

    Hmm it appears like your blog ate my first comment (it was extremely long) so I guess I’ll just sum
    it up what I wrote and say, I’m thoroughly enjoying your blog.
    I too am an aspiring blog writer but I’m still new to the whole thing.
    Do you have any suggestions for beginner blog writers?

    I’d definitely appreciate it.

    Feel free to surf to my web-site: 먹튀검증

  11. sex izle says

    It’s going to be end of mine day, however before finish I am reading this impressive piece of writing to increase my experience.

  12. 토토검증업체 says

    Admiring the dedication you put into your website and in depth information you present.

    It’s awesome to come across a blog every once in a while that isn’t the same
    old rehashed material. Wonderful read! I’ve saved your site and I’m adding your RSS
    feeds to my Google account.

    My site 토토검증업체

  13. 토토사이트 says

    Undeniably consider that which you said. Your favorite justification appeared to
    be on the internet the easiest factor to remember of.
    I say to you, I definitely get annoyed at the same time as other folks think about issues that they plainly don’t understand about.
    You managed to hit the nail upon the top and defined
    out the whole thing with no need side-effects , other people can take a signal.
    Will probably be back to get more. Thanks

    My web-site – 토토사이트

  14. vid to mp3 comconver says

    Thanks for sharing such a good opinion, paragraph is
    fastidious, thats why i have read it entirely

  15. Declan C says

    If you desire to obtain much from this article then you
    have to apply these techniques to your won website.

  16. 먹튀검증업체 says

    Thank you for another wonderful post. Where else may anyone get that type of info in such an ideal approach of writing?
    I’ve a presentation subsequent week, and I am at the search for such information.

    Look into my webpage … 먹튀검증업체

  17. Changes says

    Hello everybody, here every person is sharing these
    familiarity, therefore it’s good to read this weblog, and I used to pay a quick visit this
    weblog daily.

  18. 사설토토사이트 says

    I all the time used to read post in news papers but now as I am
    a user of net thus from now I am using net for articles, thanks to web.

    Take a look at my homepage :: 사설토토사이트

  19. slot gacor says

    Hello there! This blog post could not be written much
    better! Going through this post reminds me of my previous roommate!

    He always kept preaching about this. I’ll send this post to
    him. Pretty sure he’ll have a very good read. Thank you for sharing!

  20. 사설토토 says

    What’s up, I read your blogs on a regular basis. Your humoristic style
    is witty, keep doing what you’re doing!

    my homepage 사설토토

  21. Bola Online says

    Everything is very open with a precise explanation of the issues.
    It was definitely informative. Your site is very helpful.
    Many thanks for sharing!

  22. judi lapakpusat says

    It is the best time to make some plans for the future and it’s time to be happy.
    I’ve read this post and if I could I desire to suggest you few interesting
    things or suggestions. Maybe you could write next articles referring to this article.
    I wish to read even more things about it!

  23. telegram accounts tdata says

    Remarkable! Its in fact awesome article, I have got much clear idea regarding
    from this paragraph.

  24. Let them suck your dick says

    Tattoo couple on the bed having sex in different positions and poses.In order not
    to get knocked up he put on a condom which never took off,came in the crawl position without taking
    it out

  25. says

    It’s a shame you don’t have a donate button! I’d certainly donate
    to this fantastic blog! I suppose for now i’ll settle for bookmarking and adding your RSS feed
    to my Google account. I look forward to new updates and will
    talk about this blog with my Facebook group. Chat soon!

  26. Beylikdüzü Escort says

    Hi there! I know this is kind of off topic but I was wondering which blog platform are
    you using for this website? I’m getting sick and tired of WordPress because I’ve had
    problems with hackers and I’m looking at alternatives
    for another platform. I would be fantastic if you could point me in the direction of
    a good platform.

  27. 먹튀검증 says

    Admiring the persistence you put into your site and in depth information you present.
    It’s great to come across a blog every once in a while that isn’t the
    same out of date rehashed information. Excellent read! I’ve bookmarked your site and I’m including your RSS
    feeds to my Google account.

    Also visit my web-site :: 먹튀검증

  28. auto verkopen says

    Attractive component of content. I simply stumbled
    upon your weblog and in accession capital to assert that I acquire actually enjoyed account your weblog posts.
    Anyway I will be subscribing for your augment or even I fulfillment
    you get entry to consistently fast.

  29. 토토사이트 says

    Hey there would you mind letting me know which web host you’re utilizing?
    I’ve loaded your blog in 3 completely different web browsers and I must say this blog loads
    a lot faster then most. Can you recommend a good internet hosting provider at a reasonable price?
    Thank you, I appreciate it!

    Here is my web-site :: 토토사이트

  30. p.u.s.h disposables says

    Great blog here! Additionally your web site lots up fast!
    What web host are you using? Can I get your
    associate link to your host? I desire my site loaded up as quickly as yours lol

  31. cake dispo says

    Thanks for a marvelous posting! I really enjoyed reading it, you may be a great author.I will always bookmark your blog and will eventually come back sometime soon. I want to encourage one to continue
    your great writing, have a nice day!

  32. 코인선물거래 says

    I’m not sure why but this weblog is loading very slow
    for me. Is anyone else having this problem or is it a problem on my
    end? I’ll check back later on and see if the problem still exists.

    Also visit my blog :: 코인선물거래

  33. 사설토토사이트 says

    Greetings! Quick question that’s completely off topic. Do you know how to make your site mobile friendly?
    My web site looks weird when browsing from my apple iphone.

    I’m trying to find a theme or plugin that might be able to correct this problem.
    If you have any suggestions, please share.

    Feel free to visit my blog post 사설토토사이트

  34. 먹튀검증사이트 says

    For most recent information you have to go
    to see the web and on the web I found this web page as a finest web page for
    latest updates.

    Stop by my blog post; 먹튀검증사이트

Leave A Reply

Your email address will not be published.