Paris (AFP)

The decision of the colossal asset manager BlackRock to move away in part from coal could encourage greener finance but raises many questions about how the future of the planet is taken into account by investors.

Last week, the New York-based juggernaut announced in a letter to its customers that sustainable investments must become its "norm" and that it will withdraw from companies deriving more than 25% of their revenues from coal production thermal.

Hailed as a first step by some fund managers, this approach made headlines, some suggesting that BlackRock gave priority to the climate, or even that it abandoned fossil fuels.

But for many analysts and sources in the industry, the plans of BlackRock, which is responsible for managing the $ 7 trillion entrusted by individuals or institutions, are far from clear.

Faced with the devastating impacts and the increasing cost of climate change, more and more companies are seeking to reduce the risks of having their assets in projects linked to fossil fuels, depreciated or blocked.

Among these energies, coal is by far the most harmful on the planet. According to UN climate experts, to hope to limit warming to + 1.5 ° C compared to the pre-industrial era, the use of coal should be reduced by two-thirds by 2030 and almost zero in 2050.

BlackRock's decision to disengage from coal-dependent companies "is immediate bad news for the coal industry," said Anders Schelde, chief investment officer for the Danish pension fund MP.

"Given the position and scale of BlackRock, stressing that climate change is the challenge of our time is a landmark event in the investment market, and it is welcome," said AFP Charles Kirwan-Taylor, executive chairman of the Atlas Infrastructure investment fund. "But it's only a start."

For Thomas O'Neill, co-founder of the organization InfluenceMap, which tracks investments in fossil and renewable energies, BlackRock's approach will well reduce its holdings in coal.

According to him, the volume of coal held by the companies in its portfolio would drop from 2.3 billion to just over a billion tonnes. But he warns of certain pitfalls, taking the Norwegian sovereign wealth as an example.

- Far from the end of hydrocarbons -

In 2015, the fund also announced it would withdraw from companies generating more than 25% of its coal revenues. In the short term, the share of coal had decreased, before increasing by 12%, due to the increase in investments in companies below the ceiling of 25%, in particular a doubling of its participation in the capital of the giant Glencore mining industry ...

"Basically, there was little effect on the capital available for coal," says O'Neill.

When asked about Glencore, a spokesperson for BlackRock referred to last week's letter: "We will also be monitoring other companies heavily dependent on thermal coal."

According to the UN, so that the hope of limiting global warming to + 1.5 ° C does not fly away, CO2 emissions should be reduced by 7.6% per year, from 2020 and each year until 2030, which would require an unprecedented transformation of the world economy.

Conversely, however, emissions continue to grow and the energy giants plan to invest tens of billions of dollars in oil and gas activities over the next ten years.

And while it is relatively easy to rid asset portfolios of coal, many funds are heavily engaged in oil and gas.

In its letter to its customers, BlackRock is clear: "exposure to the world economy will be synonymous for some time with exposure to hydrocarbons".

For the manager of a fund manager who prefers to remain anonymous, with these words, "BlackRock clears itself significantly, in terms of action and schedule".

However, for Tim Buckley, another IEEFA expert, the change in strategy of the asset management giant could be a milestone in the way the financial world faces climate risks.

"When a financial institution accepts its fiduciary duty to act in the face of climate-related financial risk, the initial announcement is often only the first step," he said.

© 2020 AFP