Noose Tightens around carbon-intensive companies, Blackrock Flags ESG Warning for Corporates - Kalkine Media

December 14, 2020 01:24 PM AEDT | By Team Kalkine Media
Follow us on Google News:

The climate change and its impact are accelerating at an unprecedented pace, and so is the pressure on corporates from investors to incorporate ESG considerations in long-term planning. The evidence of the same could be gathered by inferring to multiple instances of corporates being forced by shareholders to consider climate change at the top of their decision-making plans.

Image Source : © Kalkine Group 2020

In the recent past, Exxon Mobil was targeted by activist investors while one of the United States largest pension funds – CalSTRS announced its plan to potentially divest from oil and gas stocks. Likewise, the global oil giant – Royal Dutch Shell witnessed many green executives leaving the Company amid discord over green energy push.

Joining this ever-growing list, Blackrock – one of the world’s largest money managers issued an update on its approach on engaging with corporations, in which, climate change takes a centre stage.

The money manager recently reviewed and updated its Investment Stewardship known as Blackrock Investment Stewardship (BIS), suggesting corporates on demonstrating plans to align their business with the global goal of reaching net carbon neutrality by 2050.

In January 2020, the money managers outlined their intention to engage more deeply and more often with companies in carbon-intensive sectors on climate-related business risk.

Image Source: © Kalkine Group 2020

Furthermore, in the year to June-end, Blackrock narrowed down to the universe of 440 carbon-intensive companies which roughly represented 60 per cent of the global Scope 1 and Scope 2 emissions and voted against 55 directors while putting 191 companies under the watchlist.

The measure by the money manager flagged the risk of votes against directors in the coming years unless corporates demonstrate considerable progress on the management and reporting of climate-related risk.

From 2021, Blackrock plans to expand its targeted universe from 440 to over 1,000 companies, which would roughly represent 90 per cent of the Scope 1 and Scope 2 emitters, raising bars for corporates on better engagement and better reporting of climate change-related risks on their business.

Moreover, the money manager suggested in the BIS that if a company does not provide adequate public disclosures for it to assess how they are dealing with material risks, especially with the climate-change risk on the investment, the money manager would conclude that such risks by corporates are not appropriately managed and mitigated.

Apart from the climate change-related risk, the updated BIS also pointed towards the increasing need for better ESG considerations and integration into the long-term planning over the mitigation of such risks on the investment.

While Blackrock’s warning could drum a bit louder over its considerable influence on proxy battels against corporates, the impact of many ESG issues has been clearly evident until now.  

For example, the ASX-listed iron ore miner – Rio Tinto Limited (ASX:RIO) had witnessed a strong community backlash over the destruction of an indigenous site due to poor internal monitoring, leading to the firing J-S Jacques along with the reshuffling in the senior management.

Despite such stringent implications, the miner is even facing a potential penalty threat of $250 million.

To Know More, Do Read: Rio Tinto (ASX:RIO) Likely To Face $250 Million Payout For Juukan Gorge Destruction


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.



Top ASX Listed Companies

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK