BlackRock to Continue Pushing Companies on Material Climate Risks Despite Criticism from US Politicians

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BlackRock to Continue Pushing Companies on Material Climate Risks Despite Criticism from US Politicians

BlackRock, the largest asset manager in the world, has announced that it will continue to push companies for information on how they manage "material" climate-related risks, despite criticism from some US politicians about its position on the energy transition. BlackRock is attempting to balance the views of Republicans who claim that environmental, social, and governance (ESG) factors have been overemphasized in investing, with those of shareholder activists and other investors who believe that the company should be pushing businesses to address climate issues more aggressively. BlackRock's engagements with portfolio companies will focus on topics like board quality and effectiveness, a company's strategy, purpose and financial resilience, executive incentives, climate-related risks, natural capital, and a company's impact on people, particularly its workers.

BlackRock's proxy voting decisions are informed by these conversations. According to the company, there have been no significant modifications in their approach to these issues, and they will continue to engage in a dialogue with companies on material risks and opportunities related to their business models and sectors. BlackRock CEO Laurence Fink's recent annual letter echoes the company's statement, stating that the firm has been vocal about seeking corporate disclosures on their plans to navigate the energy transition but that it is not their place to tell companies what to do.

Environmental concerns that BlackRock will consider include "water use, land use, waste management, and climate risk." The announcement comes as businesses and investors alike are increasingly realizing the potential dangers of climate change and its potential impact on the economy. As a result, many companies are implementing strategies to decrease their environmental impact and prepare for the transition to a low-carbon economy.

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