BlackRock, the world’s biggest asset manager with some $8 trillion under watch, says the oil companies and other polluting industries it invests in should disclose their carbon emissions and set targets to cut that pollution.
All companies in which BlackRock invests will be expected to disclose direct emissions from operations and from the energy they buy, known as scope 1 and scope 2 emissions, respectively, the investment firm BLK, -1.22% said in a letter to clients Wednesday.
Further, fossil fuel extractors should base targets to cut emissions on the carbon released when their products are burned, known as scope 3 emissions, BlackRock said.
BlackRock has long been a target of activists who said its plans were more talk than action as its portfolios continued to include fossil-fuel investments. In the last year it has started to vote against companies on climate grounds, in a marked change from past practice. In 2020 it voted against management at 69 carbon-intensive companies, including on the re-election of 64 directors.
BlackRock said last month it would target net zero carbon emissions in its portfolio by 2050, and that it would eventually consider divestment from the polluters who did not take action.
BlackRock is one of the most influential investors because of its size. The shares, bonds and other assets it controls were worth $8.7 trillion at the end of December, and this includes billions of dollars in exposure to fossil-fuel companies.
Its CEO Larry Fink has devoted recent influential shareholder letters to climate change. In early 2021, Fink said he wants companies to disclose how their business model will be compatible with limiting global warming to no more than 2 degrees Celsius above preindustrial averages, which aligns with the Paris Climate Accord, and eliminating net greenhouse gas emissions by 2050, which matches the pledge by President Joe Biden.
Some major publicly traded oil companies have already announced plans to disclose their carbon emissions, and cut them in line with the target to reach net zero carbon by 2050 set by many governments around the world.
For example, BP BP, +1.73% plans to cut its carbon emissions to virtually zero by 2050, in part by offsetting emissions through carbon capture schemes and natural forest restoration. It has also promised to grow low-carbon investments eightfold by 2025, and times 10 by 2030, while cutting its fossil fuel output by 40% in the next decade.
Anglo-Dutch Shell RDS.A, +1.02% has been criticized by environmental groups for relying on “carbon intensity” targets in the near term rather than outright emissions figures. It plans to reach net zero in absolute terms by 2050.
U.S. oil interest Exxon XOM, +1.56%, is considered a climate-change laggard among oil majors. It has committed to disclosing its emissions and has set near-term targets for reducing emissions, methane and gas flaring, with a focus on carbon intensity rather than absolute emissions.