GHG Emissions, Finance - March 20, 2017
BlackRock sharpens focus on portfolio climate risk
In outlining its engagement priorities for the coming year,.
The firm said in publishing its priorities March 13 that it plans to increase its engagement with portfolio companies to better assess and disclose how climate change will impact their performance. Calling climate risk a "systemic issue," BlackRock said it believes "enhanced, meaningful disclosures are an important step towards building understanding of the impact on individual companies, sectors and investment strategies," and called for the development of disclosure standards that are applicable to listed companies across each market and that are globally consistent.
The firm explained:
The concept of the "climate competent board" has surfaced in recent years. For directors of companies in sectors that are significantly exposed to climate risk, BlackRock expects the whole board to have demonstrable fluency in how climate risk affects the business and management's approach to adapting and mitigating the risk. We have the same expectation of boards wherever a company faces a material, business-specific risk. We would assess this both through corporate disclosures and direct engagement with independent board members, if necessary. Where we have concerns that the board is not dealing with a material risk appropriately, as with any other governance issue, we may signal that concern through our vote, most likely by voting against the re-election of certain directors we deem most responsible for board process and risk oversight.
BlackRock said it was represented on the industry-led Financial Stability Board Task Force on Climate-related Financial Disclosures. The TCFD in December released preliminary recommendations around four thematic areas that represent core elements of how organizations operate: governance, strategy, risk management, and metrics and targets.
"Over the course of the coming year, we will engage companies most exposed to climate risk to understand their views on the TCFD recommendations and to encourage them to consider using this reporting framework as it is finalized and subsequently evolves over time," BlockRock said in its updating its engagement priorities.
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