3 Things This Week (ok…4 - it was busy!): Blackrock's ESG Edict, Biden's Green Dream Team, FED GONE GREEN, Net Zero Pension Funds

Has the eagle finally landed? We shall see....

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Larry Fink, Blackrock Founder/CEO, Touts SASB, TCFD & Corporate Purpose
On Tuesday, January 27, Larry Fink, released his 2021 Letter to CEOs. As the head of the world’s largest asset manager, it’s never a bad idea for all CEOs to consider his advice:

• CEOs of public and large private companies should report in alignment with the TCFD recommendations and, beyond climate, with the Sustainability Accounting Standards Board (SASB)
• “We are asking companies to disclose a plan for how their business model will be compatible with a net zero economy. We are asking you to disclose how this plan is incorporated into your long-term strategy and reviewed by your board of directors,” he wrote. 
• “Because better sustainability disclosures are in companies’ as well as investors’ own interests, I urge companies to move quickly to issue them rather than waiting for regulators to impose them. 
• “The more your company can show its purpose in delivering value to its customers, its employees, and its communities, the better able you will be to compete and deliver long-term, durable profits for shareholders.” He added that companies with better ESG profiles enjoy a ‘sustainability premium’ as they perform better than their peers.

Biden’s Dream Green Team
As expected, after Biden rejoined the Paris Agreement on day one, over the balance of the week he expanded on plans to use climate change as the economic driver needed to pull the country out of Covid.
 
To execute on the vision, here’s a summary of the Climate Dream Team Biden has assembled. Stay tuned for details on the $2-3 trillion economic stimulus package focused on green infrastructure and energy and the impact that will have on access to and cost of capital for businesses. The trickle-down effect will be a faster and greater impetus for public companies to report on ESG.
 
The US Fed has Gone Green
The US Federal Reserve has joined the Network for Greening the Financial System, a group of 75 central banks committed to addressing climate change risk in banking systems. This move signals an upcoming faster pace of adoption of ESG information to drive decision-making in financial institutions.

Pension Funds Joined the Net Zero Club
With so many global brands daily announcing commitments to achieve net zero by 2050 and the wide-spread adoption of the Task Force on Climate Related Disclosure’s reporting recommendations, it was just a matter of time before major pension funds joined the club. To wit, last week one of Canada’s largest pension funds, the Ontario Teachers’ Pension Plan Board (OTPP), announced their commitment to net-zero GHG emissions by 2050. Very soon, as in weeks from now, the OTPP will release their progressive targets for portfolio emissions, meaning companies in or aiming to be in their portfolio will need to report GHGs and their own reduction target achievements. Standby for more and more funds to make similar announcements this year.