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January 19, 2022

ESG news: January 20 edition

By staff

BlackRock’s letter to CEOs angers activists

BlackRock’s head Larry Fink released his annual letter to CEOs on Tuesday, this year defending stakeholder capitalism – which he says “is not woke” – and, among other points, highlighting the need for more shareholders to have a say in how proxy votes are cast, which the world’s largest asset manager is set to help by extending the use of a digital platform that it currently offers only to some of its institutional clients.

The letter, however, attracted criticism from environmentalists pointing to BlackRock’s fossil fuel investments and lack of oil and gas divestment policy, which Fink reiterated in his 2022 letter, where he also expressed support for natural gas as a transition fuel.

Lara Cuvelier, campaigner at not-for-profit Reclaim Finance said: “Larry Fink’s latest letter reveals BlackRock to be more of a hindrance than a help on climate.” 

Critics also include BlackRock’s former chief investment officer for sustainable investing, Tariq Fancy, who in response to the letter told CNBC that “sustainable investing for the most part is just marketing and PR” and that the solution to environmental and social concerns is mandatory compliance, rather than the ideas behind stakeholder capitalism which, Fancy says, “make absolutely no sense in practice”.

New ESG reporting standards for European VCs

Invest Europe, the association representing European venture capital, private equity and infrastructure companies, previously known as EVCA, has announced it will launch a set of environmental, social and governance-based reporting standards to help the sectors it represents deal with mounting regulatory and investor demands for action and transparency on companies’ ESG activities.

“The proliferation of ESG reporting requirements places a heavy burden on European private equity managers, many of which are spending too much time on developing templates and reporting, rather than focusing on delivering tangible ESG results across their firms and within portfolio companies,” said Invest Europe’s CEO Eric de Montgolfier. The association says its standards will be ready by summer 2022. 

ExxonMobil announces 2050 net zero goals

Oil and gas supermajor ExxonMobil caved in to investor and environmental groups’ pressure and on Tuesday announced its goal of becoming carbon neutral across its global operations by 2050, and committed to release plans on how it will achieve this by the end of 2022, having identified “more than 150 potential steps and modifications that can be applied to assets in [ExxonMobil’s] upstream, downstream and chemical operations”.

While the pledge is a big step for the Texas-based group, which had previously resisted calls for a climate plan, it ignores the carbon emissions deriving from the fuels the group sells and it is considered weaker than commitments by European rivals like Shell, which last year committed to reduce oil output and petrol and diesel production as part of its 2050 net zero goal, as reported by the Financial Times.

Babcock says anti-defence campaigners are ‘hijacking’ ESG agenda

In an interview with the Financial Times, the head of Babcock International said anti-defence campaigners were using ESG concerns to keep funding away from the industry, as investors ramp up demands to cut emissions of fighter jets and tanks and to request greater transparency over the manufacturing and sale of weapons.

David Lockwood, chief executive of the British defence group, said that “the fact that the anti-defence lobby tries to hijack the ESG lobby is really bad”, and added that this is not because of genuine environmental or governance concerns but because “they must be arguing we are bad for society and that is just nonsense”. He said the industry plays an important role in keeping the world safe.

Other UK defence contractors have talked about unintended consequences of ESG standards, with some warning about the risks of certain sectors being ‘blackballed’.

UK offshore wind capacity strengthened thanks to Scottish auction

On Monday, the Scottish government surprised both contractors and environmentalists as it awarded 25 gigawatts of offshore wind project development rights, more than double the UK’s existing offshore wind capacity, reported the Financial Times, in what ended up being one of the biggest auctions of its kind in the world. The UK can already generate about 10GW of electricity from existing offshore wind farms and the initial aim of the auction was to add another 10GW of generating capacity.

This will also be the first time floating wind turbines, tethered to the seabed, will be used commercially at a large scale, as more than half the projects, with a total capacity of 13GW, will rely on this technology. 

A service from the Financial Times