24 Mar BlackRock accelerates plans to protect the natural environment
Leading global asset management business BlackRock is urging companies to act on deforestation, biodiversity loss and ocean pollution. BlackRock is planning to encourage businesses to accelerate their strategic plans for environmental protection.
The investment stewardship team at BlackRock are pressing for more details on how businesses are managing climate risk and requesting them to focus further on natural capital, according to the stewardship priorities released last week. Michelle Edkins, the MD in the investment stewardship team stated that they are requesting a more detailed dialogue in corporate disclosures on how they are measuring and managing climate impact.
On specific subjects like sustainable agriculture, biodiversity, deforestation and freshwater, Edkins explains that the investment case is based on the need for businesses to be more mindful of their impact on natural capital.
In their recently published guidelines, the leading asset manager said they were willing to oppose the re-election of directors if businesses had not clearly managed or disclosed the associated risks concerned with the depletion of natural capital, the global stock of natural resources. BlackRock also stated that they will favour shareholder proposals with an emphasis on natural capital risks. Sandy Boss, the global head of investment stewardship at BlackRock emphasised the strong connections between natural resource consumption and climate change risks. Mr Boss explained that it won’t be possible to reach the Paris Agreement goals, let alone the net zero emissions target by 2050 without eliminating deforestation and focusing on protection and restorative measures.
According to the World Economic Forum, over half of the annual output created across the global economy is dependent to some scale on our nature. Issues of illegal deforestation are threatening large areas of the Amazon, Africa and South-East Asia. Last year BlackRock announced its support for a shareholder plan at Procter & Gamble which required a report on its efforts to reduce forest degradation due to the continuous threat of palm oil production.
Mr Boss explains that they expect businesses to implement the necessary processes to determine, manage and control impacts on the environment. Larry Fink, the CEO of BlackRock is a prominent support of sustainable investment and has urged other business leaders to work towards stronger environmental, social and governance standards to improve overall returns for their shareholders.
There are some critics who believe BlackRock has not utilised its influence in the correct manner, particularly with certain ESG issues. This includes a lack of stringent consequences for businesses that failed to address environmental issues. Industry critics suggest that BlackRock should incorporate a definitive policy with clear accountability measures that ultimately create benefits for our people and planet.
BlackRock has also revealed plans to implement stricter measures in terms of executive pay. BlackRock is requesting details on how remuneration packages are connected to the interests of all stakeholders. Mr Boss explains that BlackRock is expecting businesses to take further steps to control the risks to their employees that could occur as a result of their business practices.