Investment giant's move toward sustainability offers hope for climate activism: Don Pittis

One of the reasons people are worried climate change will be almost impossible to stop is that pumping carbon into the atmosphere is simply way too profitable.

Even as new reports yesterday from NASA and the British weather service showed climate change had created the hottest decade in history, according to the traditional rules of capitalism, if companies make fortunes from digging coal and building pipelines, then nothing is going to stop them.

With so much money at stake, not only do shareholders and employees get onside, but governments may often be persuaded to actively back increased carbon output, even when they have evidence it will ultimately damage the local and global economy.

That's why this week's announcement by BlackRock — often described as the world's richest money manager, with about $10 trillion to invest (no, the T is not a mistake) — is both surprising and encouraging.

All just talk

Although it is easy for climate activists to insist BlackRock has not gone far enough, the moves it has made — seen partly as a response to outrage that the company's previous green talk was just that, talk — appear to offer evidence that business can be swayed by public pressure.

The news is especially interesting because, while global in scope, BlackRock is a U.S. company — a country where the Trump administration seems to be doing everything it can to stand in the way of climate action, from defanging the Environmental Protection Agency to withdrawing from the Paris Agreement.

That is not the way things are supposed to work, and according to people like energy economist Mark Jaccard, it is governments that must be forced by public pressure to take the lead on climate change.

"You need to get climate-sincere politicians in there; you have to be able to identify them and you have to keep them there," Jaccard said in a recent interview. "And it turns out with something like climate change, that's really difficult."

Jaccard is the kind of guy who supports anything that works to solve the climate problem, but, as he contends in his book The Citizen's Guide to Climate Success, we must not depend on the motive of profit.  

Because of the low cost and high commercial efficiency of continuing to use fossil fuels, the only effective climate action entails voters forcing governments to change the rules.

BlackRock and coal

While most climate advocates say that remains true, BlackRock's moves to cut investments in companies that earn more than 25 per cent of their revenue from fossil fuels, get out of coal, and require companies in which it invests to reveal their level of climate risk (sometimes called climate transparency) seem to belie the idea that corporations have no morals.

Many commentators scoff at that idea, including Ian McGugan, who writes in The Globe and Mail that "BlackRock's Green Investing Strategy is Not a Moral Awakening." Like many others, however, he concedes that huge protests specifically naming the company have likely influenced its change in focus.

It may be that coal is simply a bad investment today. But the fact that "the world's most powerful investor" says so too makes it harder to ignore.

And while it is easy to say that green credentials are just an exercise in public relations, expressions of public morality, such as the campaign against blood diamonds, have had a real business impact.

As with all moral questions, the argument over whether business leaders are merely parroting a growing public anxiety to earn greater respect applies just as well to the rest of us. On the other hand, companies are not just machines. They are organizations made up of people, some of whom worry about the world their children and grandchildren will inherit.

And even in giant corporations, opinions on climate change matter. 

Also this week, James Murdoch, son of global media mogul Rupert Murdoch (and a company board member), made global headlines when he criticized News Corporation's influential media outlets for promoting climate denial during Australia's recent fires.

BlackRock's new position on climate is no reason for activists to stop worrying; as Jaccard insists, government rules and public pressure remain crucial. 

And as the company has outlined, one of the reasons to begin adjusting its portfolio now is that a groundswell of public and (some) government support for climate action means climate-unfriendly businesses will no longer be good investments.

For a company investing for the future, that matters.

"Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance," said BlackRock CEO Larry Fink in a letter to company executives.

Yesterday, the World Economic Forum, whose annual Davos gathering of the very rich and powerful which begins next week, released its latest annual risk report, titled 15 Years of Risk: From Economic Collapse to Planetary Devastation. Four of the Top 5 worries delineated by the world's business and political elite had to do with climate.

In the past, the activist group BlackRock's Big Problem have accused the investment giant of being "the biggest driver of climate chaos you've never heard of."

And while it remains to be seen whether the company's efforts will truly make a difference, at the very least, its latest move means a lot more people now have heard of them.

Follow Don on Twitter @don_pittis