The good news is that the world’s largest fund manager, BlackRock, just closed $1 billion of a record $2.5 billion fund dedicated to solar, wind, and energy storage projects.
BlackRock’s Global Renewable Power III fund has commitments from more than 35 institutional investors in North America, Europe and Asia and “reflects strong investor demand for renewable power assets,” according to a press release.
BlackRock already has one of the world’s largest renewable power portfolios, with $5.5 billion in assets under management, and investments in more than 250 wind and solar projects since 2011.
“As global power generation shifts from two-thirds fossil fuels to two-thirds renewables over the next few decades, renewables are increasingly becoming a standalone allocation for investors and one of the most active sectors in infrastructure;” said David Giordano, global head of BlackRock Renewable Power.
The bad news
The bad news is that the $2.5 billion fund is a tiny fraction of BlackRock’s $6.96 trillion balance sheet and small change compared to BlackRock’s $17.5 billion (and growing) investment in coal.
According to The Global Coal Exit List, “BlackRock is not only the largest investor in companies developing new coal plants, it is also the largest shareholder in oil, gas, and thermal coal reserves.”
The Financial Times quotes Christopher Hohn, founder of the TCI hedge fund, as saying that “major asset managers such as BlackRock have been shown to be full of greenwash.“ The newspaper added that BlackRock “continues to pour money into sectors such as fossil fuels through its mainstream investment products – dominated by passive funds that track indices.”
ImpactAlpha expanded on that: “As a manager of mostly ‘passive’ portfolios pegged to indexes, BlackRock has been loath to divest from fossil fuels and other environmentally destructive industries and only rarely bucks management on shareholder resolutions.”
But other large funds are changing their ways: Japan’s $1.6 trillion Government Pension Investment Fund is potentially shifting up to $50 billion of its fund to add more careful review of the “negative externalities” created by firms in its portfolio.
The Financial Times’ Gillian Tett wrote that BlackRock has started “implementing a comprehensive internal analysis of all its operations in relation to climate change, covering both active and passive funds.” She expects “more pressure on corporate management for climate-risk disclosure and other environmental, social and governance issues.”