BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

BlackRock Inc. Chief Executive Officer Larry Fink said a growing number of investors are focusing on climate change and that companies embracing stakeholder capitalism are outperforming peers. Speaking at a Bloomberg New Economy Forum event broadcast Thursday, he said Joe Biden’s decision to return the U.S. to the Paris climate agreement will be “monumental” and would support the work of investors that have focused on climate change.

On the third day of the four-day forum, Fink joined other world leaders and industry chiefs in discussing how they would deal with the challenges posed by climate change. European Commission President Ursula von der Leyen said Europe wants to invest over a third of its 750-billion-euro ($890 billion) economic stimulus in projects compatible with the bloc’s climate neutrality goal. Other panelists agreed that the march toward a greener economy is headed into a more difficult second phase that will aim to replace carbon as an energy source.

Bill Gates and Tedros Adhanom Ghebreyesus, Director-General of the World Health Organization, will headline the final day of the conference, which will focus on global health. Pharmaceutical industry executives such as Moderna CEO Stéphane Bancel and senior epidemiologists including China’s Wu Zunyou are also set to speak.

The event is organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News. More information can be found online at www.neweconomyforum.com and on the Bloomberg Terminal.

Sinopec to Include Green Energy in Core Businesses: Chairman (10:43 a.m. HKT)

China’s biggest oil refiner, Sinopec Group, is expanding its core business to include green energy and various materials, said company chairman Zhang Yuzhuo on Bloomberg’s New Economy Forum on Thursday.

The company, which will use natural gas as its main source of energy, plans to develop geothermal, offshore wind, and solar power, he said. It is also building hydrogen refilling stations as part of cities’ plans to promote hydrogen-powered cars. -- Kathy Chen, Dan Murtaugh

Coal Will No Longer Be Cheapest Option for Malaysia by ‘24: Yeo (10:06 a.m. HKT)

When Malaysia policymakers shape the country’s next power plan in 2024, coal will no longer be the cheapest generation option, Yeo Bee Yin, a member of the nation’s parliament and the former energy minister said at the New Economy Forum.

Only markets and technology will be able to drive change that is quick enough for Asian nations to meet the Paris Agreement goals, she said, adding that China making its climate goal pledge helps other countries make the same kind of commitment. - Stephen Stapczynski

Covid Stimulus Must Also Address Climate, Inequality: Figueres (10 a.m. HKT)

Post-pandemic stimulus must also address climate change and inequality in order to be successful, Christiana Figueres, who helped steer the landmark Paris climate agreement in 2015, said in a New Economy Forum panel.

Governments are planning to inject $12 trillion over the next 18 months to help economies create jobs and recover from the coronavirus, she said. That scale of stimulus won’t be repeatable in the next decade, so it must also address all of the crises that are converging on the world in 2020 -- including climate change and inequality -- in order to bring the most value to the future generations that will pay it off.

BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

The world is moving in the right direction to fight climate change, but it’s not moving fast enough, said Figueres, the former executive secretary of the United Nations Framework Convention on Climate Change.

“My concern is no longer about the direction,” she said. “My concern is speed and scale, and we are far from the speed and scale we need.”-- Karoline Kan, Aaron Clark, Dan Murtaugh

Honeywell CEO Sees Carbon-Based Replacements as Tougher Task (9 a.m. HKT)

Honeywell CEO Darius Adamczyk said companies now can adopt technologies to conserve energy to reduce carbon emissions. The replacement of carbon-based energy is a harder problem, and will require more breakthroughs, he said.

“The short-term technologies are here and frankly more of those should be used,” Adamczyk said. “But we also have to address the longer term and how we displace the use of carbon with other forms of energy.” -- Thomas Black

Eskom CEO Calls Renewables a “No-Brainer” (8:51 a.m. HKT)

Eskom Holdings SOC Ltd., South Africa’s power utility and the nation’s biggest emitter of greenhouse gas, sees itself as a model for how to transition toward cleaner energy sources, Chief Executive Officer Andre de Ruyter said during the New Economy Forum. The utility is strapped with several older, inefficient coal-fired power plants and plans to shut roughly 10-12 gigawatts worth of capacity over the next decade, he said.

While the utility will complete two coal-fired power projects conceived and planned about a decade ago, de Ruyter said that it would be impossible to get the financing for the facilities today. The shift toward cleaner technologies are enabled by the “incredible reduction in cost of renewable energy, which makes renewables a no-brainer,” he added. -- Stephen Stapczynski

U.S.-China Climate Cooperation Continued Without Trump: Xie (8:47 a.m. HKT)

Xie Zhenhua, China’s former top climate diplomat, said U.S.-China climate cooperation continued despite President Trump’s efforts.

Even after the U.S. federal government signaled it would withdraw from the Paris climate agreement, China and the U.S. maintained cooperation at local levels and through think tanks and the private sector, said Xie, who was China’s top international climate negotiator for more than a decade starting in 2007.

U.S.-China cooperation is important for the multinational climate change process, he said at the New Economy Forum. Xie recently oversaw a yearlong effort by climate scientists at Tsinghua University to model different pathways for China to reach net zero carbon emissions by 2060, a goal announced by Xi Jinping in September. -- Anna Kitanaka, Karoline Kan

Larry Fink Says Biden Will Be ‘Voice of Reason’ Markets Need (8:34 a.m. HKT)

Joe Biden’s victory in the U.S. presidential election should encourage investors, who want stability and an easing of geopolitical tensions, Larry Fink said at a Bloomberg New Economy Forum event broadcast Thursday in Hong Kong.

As Biden selects key advisers and sets priorities, Fink said the president-elect should consider spending on infrastructure and broadband for all U.S. homes. Fink, who is sometimes floated as a potential candidate to be U.S. Treasury secretary for Democratic administrations, said he’s “very happy at BlackRock” and that he’s “staying in New York for the time being.”

“They’re looking for a voice that moderates, not a voice that incites,” Fink said at a Bloomberg New Economy Forum event broadcast Thursday in Hong Kong.. “President-elect Biden can be that voice of reason.”

On the debate for additional fiscal stimulus in the U.S., Fink said concerns over a ballooning deficit can be put to one side, for now, given inflation is low.

BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

Fink also said how companies approach environmental, social and governance issues has become a defining factor for investors. Many firms have evolved from a primary focus on maximizing shareholder profits to one where they also prioritize their impact on clients, employees and the communities in which they operate. The companies that best embrace “stakeholder capitalism” are outperforming their peers and will continue to do so, he said.

“We are seeing this reallocation of capital,” Fink said in an interview with Carlyle Group Inc.’s David Rubenstein. “Those companies who are more and more focused on ESG strategies and stakeholder capitalism, they’re trying to get a higher P/E than some of the companies that are in denial.”

Biden’s decision to return the U.S. to the Paris climate agreement will be “monumental” and would support the work of the growing number of investors that have focused on climate change, said Fink. -- -- Annie Massa, Enda Curran, Alastair Marsh

A “Green” Recovery Can Help Accelerate Global Growth: Grauer (8:08 a.m. HKT)

An economic recovery based on clean energy “accelerates growth while reducing carbon emissions,” Bloomberg LP Chairman Peter Grauer said in a speech to the New Economy Forum.

“There is no contradiction between GDP growth and sustainable development.”

Bloomberg is working on ways to benchmark green investments, Grauer said, based on the belief that transparent financial markets will be the instruments of change. -- James Thornhill

HSBC’s Quinn Calls for Bank Action on Climate Change (11:05 a.m. NYT)

Big banks cannot shirk their responsibility to help fund the world’s move towards a low-carbon economy, HSBC Holdings Plc Chief Executive Officer Noel Quinn said.

“We have got to finance this transition,” said Quinn, who called on other institutions to get behind efforts to provide more funding for green technology. “The whole financial system needs to play its part in that.”

BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

HSBC expects to help finance between $750 billion and $1 trillion over the next 10 years as part of its commitment to fight climate change.

Quinn said it was important that banks agreed to set of common standards on sustainable financing to aid efforts to expand green finance, with peer pressure also motivating change. -- Harry Wilson

Guggenheim’s Minerd Wants Climate Change Standards for Companies (10:50 a.m. NYT)

Guggenheim Investments Chief Investment Officer Scott Minerd said there needs to be standards put in place for corporations to act together in support of global climate change.

“There’s no uniform definition of what net zero is” and “little time is being spent on trying to set economic incentives,” Minerd said. The approach to climate change needs to focus on the “substance of the matter,” rather than the individual act of individual corporations, he said.

BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

Corporations will continue to act in their own best interest without standard policies in place, according to Minerd. There are incentives that can be set “that basically don’t cost anything” for the governments in order for change and progress in climate change to be made, he said.

“In a free market society, we are driven by everyone’s self interest,” said Minerd. Today, there is no economic incentive for investors to change their standards, which will continue until there is broader change and support, he said. -- Katherine Doherty

Moniz Calls for Increase in Gas Capacity as ‘Backup System’ (10:25 a.m. NYT)

Gas capacity will be needed even as renewable power soars globally, said Ernest Moniz, former U.S. Secretary of Energy and chief executive officer at Energy Futures Initiative. Gas will remain relevant even as new technologies such as hydrogen are developed.

“It’s in effect a backup system,” Moniz said. As an example, “electrifying heating is great, but when you get that polar vortex in New England, we’ll probably need to bring in the cavalry,” he said. -- Laura Millan Lombrana

Iberdrola CEO Says Clean Energy Investments Need to Triple (10:12 a.m. NYT)

Investment in clean energies needs to triple to deliver on greenhouse gas emissions cuts and efficiency measures committed up until now, said Iberdrola SA Chairman and Chief Executive Officer Ignacio Sanchez Galan.

BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

“The investment necessary to make for electrifying the economy is so huge that there is room for everybody,” Sanchez Galan said. “Those oil cos moving in this direction are welcome. I used to say they were our enemies --now I’m very pleased that they are our competitors, that’s great.” -- Laura Millan Lombrana

Africa Faces Enormous Energy Transition Challenges, Wapakabulo Says (10:05 a.m. NYT)

Africa is facing huge challenges in implementing the energy transition, said Josephine Wapakabulo, founder and managing director of TIG Africa. About 600 million people today still don’t have access to electricity and getting it would require an investment of $120 billion just in Sub-Saharan Africa.

The issue is “how we can make the majority of that” renewable energy,” she said. “The beauty of the ops we have in Africa is that because some of the remote areas don’t have access today, there’s a lot of leapfrogging happening in terms of decentralizing grids and solar.”

BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

Africa’s path toward the energy transition will be dual, with oil and gas powering a lot of the demand over the short to medium term, and gas and renewable power taking over in the longer term. -- Laura Millan Lombrana

Carney Says Covid-19 Shock Provides Ecomomic Opportunity (9:50 a.m. NYT)

The recovery from the economic shock of Covid-19 will provide an opportunity to direct economies towards sustainable growth models, a shift that would require huge investment and would be “capital intensive and job heavy,” said former Bank of England governor and United Nations special envoy for climate action Mark Carney.

Governments can do a lot to set the general direction of travel, said Carney, who’s also finance adviser to the U.K. prime minister for the upcoming United Nations climate summit.

BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

U.S. President-elect Joe Biden’s commitment to reach net-zero emissions by 2050 and move to 100% clean energy serve as clear markers, while the development of hydrogen power, zero emission vehicles and clean power generation send signals to investors and “get money moving,” he said.

“Government has to start with the objective, fill in the framing and then, candidly get out of the way so the private sector figures out where to go,” Carney said. -- Alastair Marsh

Allbirds CEO Says Consumers Want to Buy Sustainable Products (9:25 a.m. NYT)

Shoppers care about sustainability and want to buy sustainable products, but they’re confused about what it all means, said Joey Zwillinger, CEO of sustainable shoemaker Allbirds Inc. That’s a consistent theme he’s seen across markets in Asia, Europe and North America.

“I really do sense that people want to do the right thing,” Zwillinger said. “Once we clear up some of the confusion on what does carbon footprint even mean, I think we’ll start to see even more progress.”

BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

It wasn’t like that back when Allbirds was founded in 2015, he said. When it came to actually shelling out dollars for a product at the cash register, consumers would prioritize the product over all else. That’s been shifting in recent years, as people care more about how things are made and how it affects the climate.

It took the company almost three years to develop a shoe sole that was sustainable, made from sugar-cane byproducts rather than the typical petrochemicals. -- Kim Bhasin

Unilever’s Jope Says Biden Win Is Benefit for Climate (9:07 a.m. NYT)

Joe Biden’s victory in the U.S. presidential election is positive for companies committed to fighting the climate crisis, Unilever Chief Executive Officer Alan Jope said.

“The capital markets and investors need to invest in properly run sustainable and green businesses,” Jope said. “In that regard, an administration in the biggest economy in the world that reenters the climate-change debate and a green recovery of course is going to be good for the system.”

BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

Jope also reiterated earlier comments that the “most important” measure governments should take in the near-term is pricing carbon, either through a cap-and-trade mechanism or a carbon tax. Unilever is working with Microsoft Corp. to build a digital model of the planet that will enable the company to label the carbon footprint of each of the products sold under its more than 400 brands, which include Dove soap, Ben & Jerry’s ice cream and Domestos bleach.

Information relating to issues such as deforestation and social impact will either feature directly on the label or will be accessible online via a QR code, Jope said. -- Thomas Buckley

India Takes Steps Toward Carbon Neutral, Tata’s Chandrasekaran Says (8:55 a.m. NYT)

Becoming carbon neutral by 2050 isn’t as straightforward for a country like India as it is for other countries and regions, said Tata Sons Ltd. Executive Chairman Natarajan Chandrasekaran. Energy consumption will raise over the next few years as the country becomes the world’s third-largest economy, and so will its carbon footprint.

The country is on track to fulfilling its 2015 Paris Agreement commitments by increasing the presence of renewable power in its grid, setting up micro grids and investing in electric vehicles.

BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

“While the commitment might not be by 2050, the point is that India is taking very aggressive steps,” Chandrasekaran said. -- Laura Millan Lombrana

IMF’s Gopinath Pushes for Carbon Tax to Drive Green Recovery (8:46 a.m. NYT)

Harnessing energy sources that are cheaper than fossil fuels “isn’t enough” to drive a green recovery, IMF Chief Economist Gita Gopinath said.

More important is a carbon tax, which should be “set up small but then increase over time to change consumer behavior” and incentivize the private sector to invest in renewables, she said.

In addition, carbon pricing is one of the most efficient ways to transition toward a low-carbon economy, but countries setting up carbon markets on their own won’t be enough, Gopinath said.

BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

“There has to be cooperative solution here,” she said. “Agreeing on a minimum carbon price globally would be very helpful in bringing about that transition.” -- Laura Millan Lombrana and Thomas Buckley

Anheuser-Bush Makes Big Push Into Renewable Energy (8:39 a.m. NYT)

The pandemic hasn’t changed beverage manufacturer Anheuser-Busch InBev’s plans to source 100% of the energy in its operations from renewable energy in 2025, Chief Executive Officer Carlos Brito said.

About 60% of the company’s volume now is made using renewable power; it was zero two years ago.

The current situation has taught the company that it needs to take care of its supply chain, which includes farmers and retailers, Brito said.

BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

“Farmers need to be competitive in this world where water is going to be more scarce and productivity will be top of mind for everybody,” he said. -- Laura Millan Lombrana

IMF’s Gopinath Sees Opportunity for Green Recovery in 2021 (8:25 a.m. NYT)

Most coronavirus stimulus spending this year has been focused on saving lives, but there’s an opportunity to have a green recovery in 2021, said Gita Gopinath, chief economist at the International Monetary Fund.

So far, a total of $161 billion of support measures have been made to cut emissions since the pandemic started, according to BloombergNEF research. By comparison, $878 billion will go into stimulus for carbon-intensive industries without green conditions.

“I am hopeful more will be done --2021 is the year when this should happen,” Gopinath said. “We know green investment is more job intensive and it can help in that dimension.” -- Laura Millan Lombrana

Von der Leyen Says EU Wants to Lead Green Recovery (8:11 a.m. NYT)

Europe wants to spearhead a sustainable global recovery from the coronavirus pandemic by investing more than a third of its 750-billion-euro ($890 billion) economic stimulus in projects compatible with the bloc’s climate neutrality goal, European Commission President Ursula von der Leyen said.

The world can’t afford to make the same mistake that it did in the last financial crisis when it rebuilt a “broken system” based on fossil fuels, Von der Leyen said. The 27-nations European Union has designed its latest strategy to combat the recession around the Green Deal, a sweeping overhaul that will accelerate pollution cuts, promote emissions-free cars and spur low-carbon energy technologies such as hydrogen.

BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

“We need to use our recovery stimulus to invest in the clean and digital technologies of the future to make our economies more resilient and our societies and job markets fairer,” Von der Leyen said. “We can do it if we do it together. You can count on Europe to lead the way.”

The Green Deal, which calls for Europe to zero-out greenhouse gas emissions by the middle of the century, will affect every corner of the economy, from agriculture and energy production to how cities are designed. To help kick-start the clean shift, 37% of the EU’s 750-billion-euro recovery fund will be spent on projects linked to the Green Deal. -- Ewa Krukowska

BlackRock’s Fink Calls on Investors to Embrace ESG: NEF Update

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