Sustainability in the Spotlight

Sustainability is back in the headlines in the corporate world in the wake of BlackRock’s recent communications to CEOs and clients. In founder Lawrence D. Fink’s 2020 letter to chief executives, Mr. Fink predicts that the long-term, structural effects of climate change are likely to transform the financial markets, leading to “a fundamental reshaping of finance” and “a significant reallocation of capital.” And in its 2020 letter to clients, BlackRock announces: “Because sustainable investment options have the potential to offer clients better outcomes, we are making sustainability integral to the way BlackRock manages risk, constructs portfolios, designs products, and engages with companies. We believe that sustainability should be our new standard for investing.”

Accordingly, BlackRock is requesting that companies produce significant ESG disclosures by the end of 2020. Specifically, while acknowledging that no framework is perfect, Mr. Fink calls for sustainability disclosures in conformance with the industry-specific guidelines issued by the Sustainability Accounting Standards Board (SASB) and climate-related risk disclosures that follow the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). Mr. Fink’s letter warns—in bold type—that noncompliance may result in BlackRock’s voting against or withholding votes from management and board members.