Forwarding from Cooley PubCo: BlackRock puts sustainability at the center of investment strategy

The following is a link to a Cooley PubCo post discussing BlackRock’s annual letter to CEOs.

https://cooleypubco.com/2020/01/15/blackrock-sustainability-investing-disclosure/

The Cooley PubCo post also includes a link to the annual letter. The annual letter significantly discusses climate change in the context of sustainability, but the ultimate conclusion is that BlackRock will be placing more focus of its evaluation on how a company and its board disclose sustainability

The following are a couple of quotes from the BlackRock annual letter. One question, as always, is how this will or will not change how people, businesses, organizations, governments and regulators, nonprofits, and other stakeholders act or don’t act, and possibly responsibilities and rights.

Here are a few quotes from the annual letter which you can also see by clicking this link https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter:

“We believe that all investors, along with regulators, insurers, and the public, need a clearer picture of how companies are managing sustainability-related questions. This data should extend beyond climate to questions around how each company serves its full set of stakeholders, such as the diversity of its workforce, the sustainability of its supply chain, or how well it protects its customers’ data. Each company’s prospects for growth are inextricable from its ability to operate sustainably and serve its full set of stakeholders.”

* * * * *

“We recognize that reporting to these standards requires significant time, analysis, and effort. BlackRock itself is not yet where we want to be, and we are continuously working to improve our own reporting. Our SASB-aligned disclosure is available on our website, and we will be releasing a TCFD-aligned disclosure by the end of 2020.

BlackRock has been engaging with companies for several years on their progress towards TCFD- and SASB-aligned reporting. This year, we are asking the companies that we invest in on behalf of our clients to: (1) publish a disclosure in line with industry-specific SASB guidelines by year-end, if you have not already done so, or disclose a similar set of data in a way that is relevant to your particular business; and (2) disclose climate-related risks in line with the TCFD’s recommendations, if you have not already done so. This should include your plan for operating under a scenario where the Paris Agreement’s goal of limiting global warming to less than two degrees is fully realized, as expressed by the TCFD guidelines.

We will use these disclosures and our engagements to ascertain whether companies are properly managing and overseeing these risks within their business and adequately planning for the future. In the absence of robust disclosures, investors, including BlackRock, will increasingly conclude that companies are not adequately managing risk.”

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Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only.

I am also the Chair of the Business Law Section of the Bar Association of San Francisco.

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