BlackRock, the world’s largest investor, has said that oil companies and other polluting industries should disclose their carbon emissions and set targets to reduce them, in the latest sign of the rapid reassessment of climate risks by asset managers.
All companies in which BlackRock invests are expected to disclose direct emissions from the operations and the power they buy, known respectively as scope 1 and scope 2 emissions, the investment firm said in a letter outlining its plans.
Fossil fuel extractors must base their targets for reducing emissions on the carbon released when their products are burned, known as scope 3 emissions, BlackRock said.
BlackRock is one of the most influential investors in the world due to its vast, actively managed and index-linked funds. The stocks, bonds and other assets it controls were worth $ 8.7 trillion (£ 6.4 trillion) at the end of December, including holdings of billions of dollars in oil companies.
Most of the major publicly traded oil companies have already announced plans to disclose their carbon emissions and reduce them in accordance with the goal of reaching net zero carbon by 2050 set by many governments around the world.
BP plans to reduce its carbon emissions to near zero by 2050, in part by offsetting the emissions through carbon capture and natural restoration schemes. It has also promised to eightfold low-carbon investments by 2025 and tenfold by 2030, while reducing its fossil fuel production by 40% over the next decade.
French oil company Total has made several multi-million dollar investments in renewable energy and has one of the largest clean energy projects of any major oil company.
Shell has been criticized for presenting climate plans that are vague and based on short-term “carbon intensity” targets rather than absolute emissions figures. It plans to reach net zero in absolute terms by 2050.
The US oil company Exxon, considered a climate laggard, has committed to disclosing its emissions and has set short-term targets to reduce emissions, methane and gas flaring. Like Shell, the targets are based on carbon intensity rather than absolute emissions.
BlackRock has long been a focus of criticism from activists who argued that it was failing to fulfill its responsibilities. But in the last year he has started voting against companies on climate grounds, in an abrupt turnaround. In 2020 he voted against the management of 69 carbon-intensive companies, including the re-election of 64 directors.
BlackRock said last month that it would aim for net zero carbon emissions in its portfolio by 2050, eventually considering divestment from polluters who took no action.
Companies must set rigorous short, medium and long-term goals, BlackRock said. He highlighted the UN-backed science-based targeting initiative as the prime example of an audited and credible emissions reduction program. Science-based targets are set to align companies with the targets of the 2015 Paris agreement of limiting global temperature increases to below 2 ° C.
Activists welcomed the additional details in BlackRock’s policy, but said it should insist on more targeted cuts to ensure polluters move more quickly.
Wolfgang Kuhn, director of financial sector strategy for ShareAction, a campaign group, said: “These questions are absolutely necessary, and it is about time they were included in the commitment of the company on an ongoing basis. The problem is that they are by no means enough to get us out of the hole; targets must be ambitious and companies must explain how they will reduce their emissions.
“Without concrete steps to reduce emissions, the net zero action does not amount to much more than a little additional information.”
George is Digismak’s reported cum editor with 13 years of experience in Journalism