BlackRock President and CEO Larry Fink warns that the financial risks of climate change are greater than any crisis he has experienced in his career on Wall Street.
“We don’t have a Federal Reserve to stabilize the world as in the five or six financial crises that occurred during my 40 years in finance,” said the head of the world’s largest money manager in an interview with Andrew Ross Sorkin of CNBC, which worked on television and in The New York Times on Tuesday.
“This is bigger,” he argued, asking the investment community and US corporations to help combat climate change. “It requires more planning. It requires more public-private connections together to solve these problems. And I think many of these problems could be solved, but the actions must start now.”
Fink, whose BlackRock has nearly $ 7 billion in assets under management, used his annual letter to the world’s largest companies to sound the alarm. “Climate change has become a defining factor in the long-term prospects of companies … But awareness is changing rapidly, and I think we are on the verge of fundamental finance reform.”
BlackRock will put “sustainability at the center of our investment approach,” he wrote, including everything from the construction of portfolios to the launch of new investment products that analyze fossil fuels.
“For more than eight years, I have been writing CEO letters about ‘long term’,” Fink told CNBC. “Nothing could be more ‘long term’ than climate change.”
“I believe in science. But I didn’t write it as an environmentalist. I wrote the letter as a capitalist,” he said. “My job is, as a capitalist, to help prepare our clients for the redistribution of capital. And more importantly, through that it is to provide them with an investment portfolio that exceeds the return.”
Fink’s comments come when business leaders, policy makers and investors prepare to travel to Davos, Switzerland, for the World Economic Forum next week. President Donald Trump, a skeptic that human behavior causes climate change, plans to attend the meeting this year after canceling last year due to government shutdown.
“We need to have a conversation with all the governments of the world, including our government, to be better prepared for this,” Fink told CNBC. It has been a fixed element in Davos for years. “We need to spend large sums of money on infrastructure to be more prepared for this.”
However, Fink acknowledged: “If we are going to be fair and fair, we must also focus on this transition. Many people will be left behind.” He said governments must have long-term plans to deal with the change. “Climate change will require a great energy transition. It will be 40 or 50 years.”
Fink, a Democrat, has a history of addressing social problems in his annual CEO letters. Two years ago, he called on companies to have a purpose beyond profits.
– CNBC’s Sam Meredith contributed to this report