Scott Morrison backs up resources while BlackRock leaves thermal coal

Laurence “Larry” Fink, president and CEO of BlackRock.Credit:Chris Goodney

“The plan of our government is to meet and exceed the emission reduction objectives, without imposing taxes on people, raising electricity prices and taking out the carpet of regional communities that depend on the sector for their livelihood.”

“We will continue to maintain a balanced approach to ensure that it is of interest to Australia.”

The change of the monetary giant based in New York, which is the largest local shareholder of BHP, is significant due to its size, scope and marketing power: it operates in dozens of countries and is often called the largest shadow bank of the world.

BlackRock manages $ 7 billion ($ 10 billion) in funds worldwide.

An action plan outlined by its influential executive director and founder, Laurence Fink, will cause it to throw $ US521 million of thermal coal shares into its $ US1.8 billion of actively managed portfolios.

The coal ban will not apply to the $ 5.2 billion it manages in passive funds, but the company will help investors remove fossil fuels from those portfolios if requested. It will also adopt a more activist approach to vote against managers of companies that fail to move towards the objectives of the Paris Climate Agreement.

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The measure echoes the growing concern within Australia’s corporate sector about the country’s approach to reducing carbon emissions.

Climate change sharply focused this week after Morrison said his government could change its approach to emissions policy in the midst of the forest fire crisis, although it ruled on increasing emissions targets or introducing a tax on carbon.

The lack of action led technology billionaire Mike Cannon-Brookes to lash out against the Australian Business Council, which represents some of the largest companies in the country, calling it “strongly regressive force” on climate change issues, a criticism. that the BCA firmly denied.

BlackRock’s plan to stop investing in companies that earn more than 25 percent of its thermal coal revenues will affect Australian companies such as Whitehaven Coal, Washington H. Soul Pattison (which owns a significant portion of New Hope Coal) and Coronado Coal .

BlackRock also has a large stake in the British-Swiss fossil fuel giant Glencore.

Will Baylis, portfolio manager at Martin Currie Australia, said BlackRock’s “relatively weak” target would not capture actions such as AGL Energy, Aurizon, South 32, CIMIC Group, Downer Group and Origin Energy, all of which have some direct exposure to thermal coal

The fund manager Martin Currie, which manages $ 12.5 billion in Australian shares and a total of $ 24.6 billion worldwide, estimates that BlackRock’s goal will only exclude investment in 0.3 percent of Australia’s top 200 companies.

“We hardly see this as a ‘decisive moment’ for Australian industry … we are active managers and we have considered ESGs for many years (environmental, social and governance issues),” said Bayliss.

Indiscriminately excluding companies at risk of ESG meant eliminating support for large coal thermal power generators such as AGL that were making an active transition to renewable energy and gas, he said.

Bronte Capital hedge fund co-founder John Hempton, who avoids investments in fossil fuels, said BlackRock’s decision was “good marketing … but in reality it is also a good investment decision.”

“If you believe in the science of greenhouse gases, it is quite difficult to imagine for a period of 30 years how carbon intensive investments are a good idea.”

“It’s not about ethics. I don’t have problems with unethical investments, I just have a problem with stupid ones. Within 30 years, most carbon-intensive industries will be stupid investments,” he said.

Fink said global warming and climate change would precipitate a “fundamental remodeling of finances” and that it was the number one problem posed by investing clients.

BlackRock has long been an objective of environmental activists and politicians who believe it could better address climate change with its great economic weight.

with AAP

Simon Johanson is a business journalist at The Age and The Sydney Morning Herald.

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