Larry Fink has unveiled a raft of actions to integrate sustainability into BlackRock's investment offering, with ESG set to be assessed with the "same rigour" as liquidity and credit risk.
In his annual letter to CEOs, Fink said climate change "has become a defining factor in companies' long-term prospects" and added that "we are on the edge of a fundamental reshaping of finance".
He said: "Every government, company, and shareholder must confront climate change."
Every government, company, and shareholder must confront climate change"
Then, in an open letter to BlackRock's clients, CEO Fink added: "We believe that sustainability should be our new standard for investing."
BlackRock was recently identified as one of the three worst-performing asset owners with regards to climate-related proxy voting by campaign group ShareAction, along with Capital Group and T. Rowe Price and has faced criticism for its apparent lack of action on climate-related matters.
Fink has now set out a number of actions, such as a commitment to double its offerings of ESG ETFs over the next few years to 150 and launching sustainable versions of flagship index products.
The asset manager also revealed it was in the process of removing from its discretionary active investment portfolios the public securities, both debt and equity, of companies that generate more than 25% of their revenues from thermal coal production, with the aim to accomplish this by the middle of 2020.
BlackRock confirmed that it will begin to offer sustainable versions of its flagship model portfolios, including its target allocation range of models, this year.
It also intends to launch sustainable versions of its asset allocation iShares this year to "provide investors with a simple, transparent way to access a sustainable portfolio at good value in a single ETF".
Fink said BlackRock would increase its focus on sustainability in its stewardship activities by "mapping our priorities to specific UN Sustainable Development Goals as well as more regularly disclosing the companies we engage with and the topics of our discussions".
In his letter, Fink stated that BlackRock voted against or withheld votes from 4,800 directors at 2,700 different companies last year.
He wrote: "Where we feel companies and boards are not producing effective sustainability disclosures or implementing frameworks for managing these issues, we will hold board members accountable.
"Given the groundwork we have already laid engaging on disclosure, and the growing investment risks surrounding sustainability, we will be increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures and the business practices and plans underlying them."
In terms of reporting standards, Fink said that BlackRock "is not yet where we want to be, and we are continuously working to improve our own reporting".
This article was first published by Investment Week, a sister title to International Investment