This week, BlackRock, the giant US asset management firm, finally takes a substantive bite out of the sustainability apple, MicroSoft one-ups Amazon on carbon, and international tennis star Roger Federer caught some fossil fuel back-splash for his relationship with Credit Suisse.
This Week in Sustainability has two editions! This one here and the special edition which came out mid-week, in which a Pundit Panel of three battle-hardened sustainability investment experts weighed in on BlackRock’s annual syrupy sustainability vision speak.
BlackRock Sets Some Sustainability Targets. Too Little Too Late?
Unlike the past two years, when BlackRock CEO Larry Fink subjected us to his words of sustainability investment vision hope, this year he took a small, if timid bite out of the sustainability apple, making some – Heaven forbid – corporate performance promises. Three stand out.
First, he promised BlackRock would invest USD 1 trillion in ‘sustainability investments’ by 2030.
What sustainable investment means is still anyone’s guess? Indeed, as Helen Avery tells us in her fine Euromoney article last month, most green investments are not all that green. It’s going to be up to the activists and clients of BlackRock, many of whom have pushed them this far, to make sure sustainable means sustainable – and not by corporate, but by sustainability activist, standards.
Second, Mr. Fink tells us that investment managers and companies need to measure and report on their sustainability impacts, good or bad.
This is a great thing. We been telling Mr. Fink et al this for over five decades. Let them not hood wink us with the “we need to figure out how to do this” delaying tactics either. The methods for measuring and reporting on sustainability performance have been around for, well, over three decades. I refer them to the GRI, SASBY, Accountability, etc.
Third and finally, Mr. Fink tells us BlackRock will not invest in companies with over 25% of their revenues coming from thermal-coal sources.
That’s a big deal! Yeah!
Of course, investing in coal over last decade has been a loser’s gambit. Says Andrew Behar, CEO of As You Sow, a leading non-profit shareholder advocacy group in the US, “I am glad BlackRock is not going to invest in bankrupt coal companies anymore.” Behar adds, “Mr. Fink said nothing about non-coal fossil fuel investments,” of which BlackRock has aplenty. This is also a sector which has had a comparatively poor investment record over the last ten years.
(As You Sow, by the way, is a very cool outfit and you can donate to them and or send your financial advisor their coordinates so they too can be sustainable-cool as well.)
I asked Frank Coleman, ex Vice Chair of CBIS and thirty plus year vet of sustainable investment, if BlackRock’s announcement is a sustainability watershed moment?
His response: “BlackRock, one of the largest asset management firms, has finally seen the light and is trying to think through its impacts and the way it manages money for the market place… giving investors (pushing for more sustainability) some attention… I hesitate to say it’s a whether shed moment but it’s a noticeable moment.”
Making Change Real at BlackRock
There are three things BlackRock can do to convince me and other sustainability experts, that they are serious about the words coming out of Mr. Fink’s mouth.
First, BlackRock needs to measure and then report on sustainability impact across its entire portfolio. Mr. Fink calls this a priority in his latest letter, so we can hope for some advances on this front.
Second, Mr. Fink must be willing to wield his USD 7 trillion-dollar divestment stick to ensure, as he proclaimed last year, that BlackRock investees understand they must “contribute to society or we are OUT.” Swinging that big old stick just once and very publicly would be a huge win.
Third, BlackRock needs to vote with activists on a good number of the many dozens of reasonable shareholder activist climate, biodiversity, equality and other related issues resolutions at investee annual general meetings.
These three actions alone could solidify what Paula Glick, Co-Founder of Honeytree Investment Management calls Mr. Frink sustainability leadership aspirations. But, as she notes, “There are a lot of fantastic other things happening in (sustainability investment) and this is just another piece of the puzzle.”
Roger Federer Fairly Stained with Credit Suisse Fossil Fuel Brush?
A few sporty climate protesters got their day in court this week for playing a game of tennis in the lobby of Credit Suisse’s headquarters in a 2018 protest of the bank’s financing of fossil fuels.
The Swiss financial giant, it turns out, enables the extracting of the planet killing stuff to the tune of over USD 57 billion.
So, they deserve a volley or two. But why tennis?
It seems the protesters thought it a good idea to link their protest to the Credit Suisse sponsored-poster boy Roger Federer, the international tennis star. Federer signed a USD 2 million a year, 10-year deal with the bank in 2009.
Federer’s recent past and ongoing annual sponsorships include Uniqlo ($30 million), Nike ($10 million), Rolex ($8 million), Wilson (no amount available), Mercedes-Benz ($5 million), Moet & Chandon ($6 million), Lindt ($4 million), Sunrise, a Swiss telecommunications provider, ($7 million), Barilla ($8.1 million), and NetJets, an air flight company, ($6 million).
Federer himself, has made few statements about climate, or anything at all sustainability more generally, in this in an age where celebrities are increasingly using their platforms to talk about and influence change.
Federer was reported to have said he had “a great deal of respect and admiration for the youth climate movement” and was “grateful to young climate activists for pushing us all to examine our behaviours and act on innovative solutions”.
“We owe it to them and ourselves to listen. I appreciate reminders of my responsibility as a private individual, as an athlete and as an entrepreneur, and I’m committed to using this privileged position to dialogue on important issues with my sponsors.”
My daughter and all her friends most of whom parents’ are not sustainability crazy like us, know, for example, that Leonardo DiCaprio and Chris Hemsworth are speaking for justice and the Climate Crisis. Celebrities like them get well-deserved accolades for this, and a better personal brands as a result. History will judge them kindly.
How will the future look back on Federer milquetoast response? I asked our sustainability sport expert friend and past Sustainable Century Podcast guest, Lew Blaustein, if it was fair for the protesters to paint Federer with Credit Suisse’s fossil fuel investments.
“It is absolutely fair, Federer is a paid endorser for Credit Suisse, and that relationship means he is vouching for the company’s values…. and paid athletes can be expected to be called out on that.”
“If you are a professional athlete,” said Blaustein, “The best way to avoid negative brand impacts is to stay away from endorsement deals from companies that are particularly harmful to the environment.”
Microsoft One Ups Amazon by Going Carbon Negative
In other, and fairly great news, MicroSoft Chief executive, Satya Nadella pledged the company would go carbon negative by 2050, one-upping its cloud-computing rival, Amazon which claims it will be “carbon neutral” by 2040.
How great is this? Major companies competing to see who have the best carbon performance! Visions of Green (negative carbon) as the New Black (ink, that is) abound!
To get there, Microsoft will have to remove more carbon from the environment than it emits. A tall task, but doable. How? The company didn’t get into the weeds and plants that will hopefully result, but broadly we can expect the company to engage in:
Seeding new and protecting existing forests – this low-tech carbon sinking technique sucks carbon out of the air, and can provide many other great benefits, from protecting native peoples land, providing sustainable resource harvests, etc.
Soil carbon sequestration – or putting carbon back into the ground through a process with makes the soil more fertile and less susceptible to erosion.
Direct air capture – a favorite of mine, this is all about sucking carbon dioxide directly out of the atmosphere through huge filters! New tech with loads of possibilities.
Bio-energy with carbon capture – growing crops then capturing the CO2 they emit. It’s a process I don’t fully understand but it’s supposed to be a good thing.
But, like Mr. Fink of BlackRock, Mr. Nadella forgot to mention a few salient, if awkward sustainability performance issues. One glaring point: how does all this great carbon news square with Microsoft’s aiding and abetting the fossil fuel industry through helping them to find their fossil fuel reserves?
Said Elizabeth Jardim of Greenpeace, in a great BBC article which broke the news, “While there is a lot to celebrate in Microsoft’s announcement, a gaping hole remains unaddressed: Microsoft’s expanding efforts to help fossil fuel companies drill more oil and gas with machine-learning and other AI technologies,”
I wouldn’t hold your breath, but perhaps negative carbon green, is the new business black (ink that is!)