BlackRock's Fink warns on fossil fuels moving to private capital

Private capital be brought in line with society on net-zero

Theo Andrew

a man standing in front of a building with a flag

BlackRock's chairman and CEO Larry Fink has said we must bring private capital on the journey to net-zero or risk “the biggest capital arbitrage in our lifetime”.

Speaking at the opening day of the Global Horizon Summit running alongside COP26 in Glasgow, Fink warned of the “window dressing of public companies” and the dangers of these fossil fuel companies falling into private hands. 

“If we are serious about a decarbonised world, we can’t just ask the public companies to move forward without the rest of society,” he said.

“It is going to create the biggest capital market arbitrage in our lifetime. More hydrocarbons have been sold to private companies over the last two years than at any time ever."

Fink said it was counterproductive to the climate target goals, and added: “The mission is failing if that is all you are doing.”

“We are going to make a lot of private enterprises really wealthy if we create this arbitrage. It is existing right now, and we have to stop that. We need governments to come together and not just do a window dressing of public companies,” Fink said.  

The CEO of the world’s largest asset manager is currently working alongside the former governor of the Bank of England, Mark Carney, on the Glasgow Financial Alliance for Net Zero (GFANZ), aimed at getting hydrocarbon intensive companies to commit to net-zero.

He said: “Let us be clear, hydrocarbon companies are part of the solution, they are not the problem and the one key message I am here for is, if we are not working with the hydrocarbon companies, we will never get to net zero.”

He added investment into new technology was also crucial to meet the targets. Last week Fink said the next 1,000 unicorns. Companies with a valuation of over a billion dollars will be in businesses developing “green hydrogen, green agriculture, green steel and green cement”.

Last month, BlackRock said it would offer the opportunity for institutional investors in certain index strategies to vote directly with companies.

The company also partnered with MSCI to change the methodology of $9bn six-strong ETF range will track MSCI climate indices that are aligned to the Paris Agreement’s 1.5°C trajectory.

The world's largest asset manager already offers a four-strong climate equity ETF range that is linked to the PAB which requires a 50% carbon intensity reduction versus the parent benchmark.

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