Hello, everyone, it is a pleasure to be with you all
today. I would like to thank the Lord Mayor of the City of
London, William Russell, and my friend Mark Carney for the kind
invitation to join this summit. And I applaud the City of London
Corporation, and the Green Finance Institute for pressing
on with this event, despite the obvious difficulties and
circumstances of this year. I would like to also like to thank
Alok Sharma, COP26, president and Secretary of State for
Business, Energy and Industrial Strategy for his leadership
ahead of the UN Climate Change Conference in Glasgow next year.
I look forward to partnering with you and your government as
well as the government of Scotland as the UK prepares to
host this important summit at such an important time for the
entire world. The unfortunate reality is that climate change
isn't slowing down because there's a global pandemic. As
investors we need to be addressing both crisises with
urgency. And I welcome the announcement yesterday by
Chancellor Rishi Sunak that the UK will issue its first green
gilts next year. We see clear demand for such assets from
investors worldwide, and other speakers have pointed out the
ambition towards a climate resilient net zero carbon
economy is accelerated as we head into the COP26 next year.
We believe the financial community has a critical role to
play in driving this transition. And that includes asset managers
like BlackRock. You often hear our industry talking about
credit risk, liquidity risk, in emerging markets risk. And in
recent years, our industry has come slowly around to understand
how climate risk is also investment risk. We see these
risks in a variety of ways. Physical impact, transition
risk, and the negative impact of climate change on global growth.
This escalating risk cannot be ignored. Investors who are
agnostic to climate change are making an active bet, a highly
risky one. As fiduciaries that invest other people's money, we
have an obligation to understand and to help our clients navigate
climate risk in their investment portfolios. Growing awareness of
climate risk as an investment risk is driving a tectonic shift
in capital, and with it asset valuations. Consider, for
example, that net flows are that reallocation of asset owners
capital into sustainable investment strategy is up over
275% in the nine months to September, compared to all of
last year. The investment industry now has the opportunity
to further accelerate this phenomenon and demonstrate that
we can be a catalyst for change. We can help bridge the financing
gap supporting the reallocation of flows towards sustainable
development. For us at BlackRock this means doing a number of
things. First, it means to fully integrate sustainability related
risk analytics into all our active investment processes.
This means that at the portfolio level, our portfolio managers
are accountable for approximately managing all
exposures to sustainability related risks and documenting
how those considerations have affected investment decisions.
BlackRock is on track to reach that goal we set in January to
have 100% of our active portfolio teams ESG integrated
by year end. Second, we are working to democratise access to
sustainable investing by making it easier for our clients to go
sustainable. This year alone, we've launched over 50 new
sustainable strategies, including index mutual funds,
fixed income products, active equities and ETFs, so that all
people can have low cost easy access to diversified
sustainable funds. We're also moving to make sustainable
building blocks the standard offering in all our solutions
and all models. BlackRock is investing billions in renewable
power, and we'll be extending our renewable investment
capabilities to emerging markets in 2021. Along with Oxford
University Endowment Management, we're announcing today the
development of a fund to help realise their commitment to
divest from fossil fuels. We're also working with one of the
largest states in the United States to do the same with their
pension fund. A little over a month ago, we launched a climate
transition fund, with Scottish Widows serving their 2 million
pension scheme members in the UK. Third, we are investing in
data and analytics necessary to help our clients and our
investors understand climate risk, how it affects our
investments. Clients often tell us that one of the biggest
challenges they face in sustainable investing is the
quality and availability of good data and climate risk analytics.
And we have recently partnered with Rhodium to build a
technology that measures the physical risk of climate change
in ways that the investment industry has never done before.
Better data analytics will help more investors account for these
risks in their investments they're making, and it will
deepen the world's understanding of climate change's vast impact
on our economy and the global economy. Fourth, we have also
wrapped up our engagement with companies unsustainable related
risks, most keenly focused on companies that face material
financial risk in the transition to a low carbon economy. In
January, BlackRock asked companies to publish, SASB and
TCFD aligned disclosures to provide a better view into ESG
risk factors. Since that call for increased transparency, we
have witnessed a dramatic increase in companies filing
disclosures aligned to those two standards. In the case of TCFD,
for example, we have seen a 400% increase in reporting. These
standards help investors understand how companies are
going to meet the goals that a majority of the world's
government, including the United Kingdom has committed, namely,
the goal of zero net carbon emissions by 2050. Because we
are taking a long term approach, and take the time to actually
engage with more companies than any other firm in our industry,
we may sometimes give companies more time to make changes than
some other people would like. We will support the management of
companies that are making progress in addressing climate
risk. But atcompanies that are not, we will vote against their
directors, we will support shareholders proposals that will
increase long term value. For example, since the main proxy
season ended in June, there have been eight climate and other
environmental proposals on corporate proxies. BlackRock's
corporate stewardship team has supported seven of those
proposals that would create long term value for our clients
invested in those companies. As we continue to advance our
stewardship efforts, accelerating progress on strong
standardised disclosures will be essential. Here in the UK, we've
urged the government and the FCA to go further and introduce
mandatory TCFD reporting for all issuers as soon as the next
year. And so we welcome the UK Chancellor's announcement
yesterday, mandatory with TCFD reporting. The United States for
its part should move faster so that we can achieve greater
global coordination. The FCC can require a clear standardised
climate risk information from companies consistent with TCFD.
The Department of Labour can make it easier not harder for
fiduciaries like BlackRock to integrate sustainability into
our investment strategies and for the Federal Reserve, and
central banks globally should use a template that Mark and
others have pioneered, to bring climate risk into their
Prudential and supervisory oversight processes. As
companies accelerate, it will be even more critical that we can
achieve global convergence, and with a goal of establishing a
globally recognised and adopted approach to sustainable related
disclosure. We've been reminded in 2020, that sustainability is
much more than dealing with the effects of climate change. The
tremendous toll of COVID-19 prices on health, economic well
being and everyone's daily activity has precipitated a
widespread reassessment of the way and how we live our lives
every day. For governments, for businesses, for consumers and
for investors, things have to change very quickly. We've seen
this virus has disproportionate effects on different segments of
the population around the world. The financial consequences of
the pandemic has exasperated and exposed greater income
inequality, while people in minority ethnic communities have
been found to be at greater risk of suffering the effects of
COVID. These significant issues will have long term consequences
for our society. Yet we have seen that regardless of
industries or companies with strong sustainably
characteristics, companies focus on all other stakeholders have
weathered the crisis more effectively. Knowing this,
what's the best way forward for financial firms and asset
managers? Asset managers have to play a role in helping to make
the global economy more resilient, more transparent, and
a lot more efficient. We have a role to play in making
capitalism work for more people. These are several avenues for us
to do this. The first is for making and making investing
available for more people. We live in a world where the
benefits of financial markets are not evenly shared. And we
have a real opportunity to address barriers to access and
participation in financial markets for individuals. Second,
we must make sure that companies focus on the long term,
operating sustainably and serve all of their stakeholders,
addressing issues like diversity, fair treatment of
workers in their supply chains, and climate preparedness. And
third, we must accelerate sustainable investments to help
create a resilient net zero economy. We are 12 months away
from COP26, asset managers must play an active role in engaging
with companies, engaging with governments and the public to
help accelerate this transition to a climate resilient future.
It's better for our clients, better for the planet, better
for the resilience of the economy, and gosh better for
individual companies as a manager own risk. Individuals
gathered here today are making these aspirations a reality. It
is a real privilege to be part of this work. And I truly want
to thank you for the opportunity to speak today.