FILE - In this March 26, 2014 file photo, BlackRock Chairman and CEO Laurence Fink is interviewed by Maria Bartiromo on Fox Business Network's "Opening Bell with Maria Bartiromo," in New York. BlackRock, the world's largest asset manager, is making climate change central to its investment decisions going forward. Fink, who oversees the management of about $7 trillion in funds, said in his influential annual letter to CEOs Tuesday, Jan. 14, 2020, that he believes we are “on the edge of a fundamental reshaping of finance” because of a warming planet. (AP Photo/Mark Lennihan, File)

World's largest asset manager shifts focus to climate change

January 14, 2020 - 9:31 am

NEW YORK (AP) — BlackRock, the world's largest asset manager, will make climate change central to its investment decisions going forward.

Founder and CEO Laurence Fink, who oversees the management of about $7 trillion in funds, said in his influential annual letter to CEOs Tuesday that he believes we are “on the edge of a fundamental reshaping of finance” because of a warming planet.

Climate change has become the top issue raised by clients, Fink said, and it will affect everything from municipal bonds to long-term mortgages for homes.

The New York firm is taking immediate action, exiting investments in coal used to generate power, and it will begin asking clients to disclose their climate-related risks.

“Because capital markets pull future risk forward, we will see changes in capital allocation more quickly than we see changes to the climate itself,” Fink wrote in the letter. “In the near future – and sooner than most anticipate – there will be a significant reallocation of capital.”

That shift is already underway.

The European Union plans to dedicate a quarter of its budget to tackling climate change and has set up a scheme to shift 1 trillion euros ($1.1 trillion) in investment towards making the economy more environmentally friendly over the next 10 years.

The Europe Investment Plan, to be unveiled Tuesday, will be funded by the EU budget and the private sector. It aims to deliver on European Commission president Ursula von der Leyen's Green Deal to make the bloc the world's first carbon-neutral continent by 2050.

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AP Reporter Samuel Petrequin contributed to this report from Brussels.

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