BLK BlackRock Inc

By Maitane Sardon

BlackRock Inc. on Wednesday gave heavy polluters new instructions for climate disclosure and said it could vote against directors that overlook climate risks.

The move comes after Chief Executive Larry Fink said in his annual letter to chief executives that companies should provide more information on how they are moving to reduce greenhouse-gas emissions.

The world's largest asset manager said it expects companies to disclose information about their overall emissions and a plan for how their business models will be compatible with a Paris-agreement-aligned economy where global warming is limited to well below 2 degrees Celsius. The net-zero plan, it said, should be integrated into companies' strategies and include short-, medium- and long-term targets and goals.

BlackRock urged businesses in carbon-intensive industries to disclose their scope 3 emissions, which are those coming from both the products they sell and the companies in their supply chains. The majority of most companies' emissions usually fall under scope 3.

BlackRock asked companies to disclose ESG metrics that are in line with the Sustainability Accounting Standards Board's criteria and the Task Force on Climate-related Financial Disclosures framework, as it said these cover "the physical, liability and transition risks associated with climate change."

When assessing businesses' approach to net-zero, BlackRock said it will consider how companies are allocating capital to address climate risks, whether they are stress-testing their assets and factoring the impacts of policies like carbon taxes into their profitability.

The asset manager didn't set any hard goals on supporting shareholder resolutions but said it could vote against company directors that don't provide credible climate plans.

Activists welcomed BlackRock's new expectations but said these should be combined with specific targets and policies for the highest polluters in its portfolios.

"While BlackRock recognizes the need to head towards a fossil-fuel-free economy and the need for companies to adopt short-term emission-reduction targets to get there, the asset manager is still heavily invested in companies launching new fossil fuel projects, despite these being completely incompatible with a 1.5 degrees Celsius pathway," said Lara Cuvelier, sustainable investments campaigner at nonprofit Reclaim Finance. "It should start by reviewing its coal policy to ensure that the 199 companies that are still developing new coal projects five years after the Paris Agreement are kicked out of its portfolios."

Write to Maitane Sardon at maitane.sardon@wsj.com

(END) Dow Jones Newswires

February 17, 2021 07:57 ET (12:57 GMT)

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