“Our government’s plan is to meet and beat emissions reductions targets, without putting taxes on people, putting up electricity prices and pulling out the rug from regional communities who depend on the sector for their livelihoods.
“We will continue to maintain a balanced approach to make sure it is in Australia’s interest.”
The shift by the New York-based money giant, which is BHP’s biggest local shareholder, is significant because of its size, reach and marketing power – it operates in dozens of countries and is often called the world’s largest shadow bank.
BlackRock manages $US7 trillion ($10 trillion) in funds globally.
An action plan outlined by its influential chief executive and founder Laurence Fink will see it dump $US521 million of thermal coal shares held in its $US1.8 trillion actively managed portfolios.
The coal ban will not apply to the $US5.2 trillion it manages in passive funds, but the firm will help investors screen out fossil fuels from those portfolios if requested. It will also take a more activist approach to voting against company managers who fail to make progress towards Paris climate agreement goals.
The move echoes growing disquiet within Australia’s corporate sector over the country’s approach to reducing carbon emissions.
Climate change moved sharply into focus this week after Mr Morrison signalled his government could change its approach to emissions policy amid the unfolding bushfire crisis, although he ruled out lifting emissions targets or introducing a carbon tax.
The lack of action prompted billionaire tech entrepreneur Mike Cannon-Brookes to lash out at the Business Council of Australia, which represents some of the nation’s largest companies, labelling it a “strongly regressive force” on climate change issues, a criticism the BCA strongly denied.
BlackRock’s plan to stop investing in companies that earn more than 25 per cent of their revenue from thermal coal will affect Australian firms such as Whitehaven Coal, Washington H. Soul Pattison (which owns a significant slice of New Hope Coal) and Coronado Coal.
BlackRock also holds a large stake in British-Swiss fossil fuel giant Glencore.
Will Baylis, portfolio manager for Martin Currie Australia, said BlackRock’s “relatively loose” target would not capture stocks such as AGL Energy, Aurizon, South 32, CIMIC Group, Downer Group and Origin Energy, all of which have some direct exposure to thermal coal.
Fund manager Martin Currie, which manages $12.5 billion in Australian equities and a total of $24.6 billion globally, estimates BlackRock’s target will exclude investment in only 0.3 per cent of Australia’s top 200 companies.
“We hardly see this a ‘watershed moment’ for the Australian industry .. . we are active managers, and have for many years considered ESG [environmental, social and governance issues],” Mr Bayliss said.
Indiscriminately excluding companies with ESG risk meant removing support for large thermal coal power generators like AGL that were actively transitioning to renewable energy and gas, he said.
Bronte Capital hedge fund co-founder John Hempton, which avoids fossil fuel investments, said BlackRock’s decision was “good marketing .. but it’s actually a good investment decision too.”
“If you believe the science of greenhouse gases, it’s pretty hard to imagine over a 30-year period how carbon intensive investments are a good idea.”
“It’s not about the ethics. I have no problem with unethical investments, I just have a problem with stupid ones. On a 30-year time frame, most carbon-intensive industries will be stupid investments,” he said.
Mr Fink said the warming planet and climate change would precipitate a “fundamental reshaping of finance” and was the number one issue raised by investor clients.
BlackRock has long been a target of environmental activists and politicians who believe it could better address climate change with its vast economic heft.
Simon Johanson is a business journalist at The Age and The Sydney Morning Herald.