The impact of sustainable investment on markets worldwide is hard to dismiss at this point. Large corporations are beginning to discover that it makes sense to be on the green side of the argument. Take Siemens for example, who have recently found themselves in hot water over an Australian coal-mining project.
For months, the German engineering company has been criticized by climate activists about a rail-signaling contract Down Under. Now, the corporation’s largest investor, BlackRock, is rebuking the company as well. MarketWatch reported that BlackRock said that the contract made it “clear that [Siemens] requires a more thorough review of the potential risks, including ESG [environmental, social and governance] risks, presented by future projects.”
Greta Thunberg’s “Friday for Future” movement, meanwhile, has been staging demonstrations in many cities to demand that Siemens remove themselves from the deal. Now with BlackRock on their side, it’s clear that even major companies like Siemens need to be aware of how their investments impact climate change concerns.
BlackRock’s public rebuking of Siemens shows that companies are no longer simply bound by government regulations. When activists and investors come together, it is clear that corporations are going to have to start paying attention to global concerns and the current trend of investors that are interested in sustainability.
Siemens’ Chief Executive, Joe Kaeser, has since acknowledged that his company should never have signed the Australian deal.
BlackRock’s reaction comes only a couple weeks after the fund’s Chief Executive Larry Fink warned investors via his annual letter that climate change’s impact on the financial world will be different than past crises. He explained that climate change is “much more structural, long term.” Furthermore, the company told its clients that it will no longer invest in companies that get over a quarter of their revenue from coal.
The fact that the world’s largest fund manager has now sided with activists to force the issue when it comes to climate change, should make companies think twice before taking on unsustainable projects.