BlackRock Is Profiting Off the Climate Crisis

For companies like BlackRock, the climate crisis is a valuable investment opportunity. They’ve positioned themselves to make money no matter how — or whether — governments address climate change.

In his 2020 letter to CEOs, Larry Fink, the chairman and CEO of BlackRock, the world’s largest asset manager, proclaimed that “climate risk is investment risk.” A more accurate read, however, is that for companies like BlackRock, climate risk is proving to be a valuable investment opportunity.Today banks, investors, and asset managers have positioned themselves to make money no matter how — or whether — countries finally take meaningful steps to stop climate change. In fact, for some of the world’s largest, most powerful, and most globally integrated companies, the climate crisis is a win-win-win situation.

If governments take little or no action, these companies will win simply by continuing to do what they already do. Companies will invest in green industries and technologies, and they’ll sell “environmental, social, and governance,” or ESG, investment products to those who want to feel better about how their money makes money. But these firms will also continue to invest in oil, gas, and coal, and offer investment services that embrace dirty industries.

If the world does take action, firms like BlackRock will win by having portrayed themselves as responsible actors whose advice and consent is needed for climate action. These companies will be able to influence which solutions governments and international organizations implement — and which will remain off the table. They’ll be able to capitalize on trillions of dollars in public investments in green industries and technologies, while governments and taxpayers shoulder much of the up-front risk.

No matter what governments do or don’t do, financial services companies will win by making bold and highly public pronouncements about their concern for the planet. These pledges will paint them as sustainable, well-intentioned problem solvers. They’ll help ensure that these companies have their views and proposed solutions given favorable consideration in climate negotiations. And they’ll distract politicians, regulators, and commentators from the companies’ unwillingness to use their enormous financial might to force genuine change.

In the short term, at least, these financial giants can’t lose. But the rest of us can. The latest report from the Intergovernmental Panel on Climate Change is brutally direct: if the global community waits any longer to take meaningful action on climate change, we “will miss a brief and rapidly closing window of opportunity to secure a livable and sustainable future for all.” Hiding these firms’ enthusiasm for fossil fuels beneath soothing promises of green investments serves only to distract from the urgency of meaningful action and thus makes an already formidable challenge even more difficult.

“We Offer Our Clients Choice on How to Invest”

Last July, representatives of the Group of Twenty (G20), a forum made up of nineteen nations and the European Union (EU), gathered in Venice for the organization’s 2021 International Conference on Climate Change. The G20 includes many of the world’s richest and most powerful countries, including the United States, China, India, and Japan. Its member countries represent more than 80 percent of global GDP and produce a similar proportion of greenhouse gas emissions.

It wasn’t surprising to find BlackRock’s Larry Fink in attendance alongside finance ministers, central bankers, and other government officials. At the time, his company was responsible for $9.5 trillion worth of investments. If its assets under management were one nation’s GDP, BlackRock would boast the third-largest economy in the world.

But it wasn’t just BlackRock’s financial clout that secured Fink’s place on stage. In recent years, the firm has successfully cultivated a different source of power: its growing reputation for leadership on social and environmental issues.

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