The recent wave of disposals of oil, gas and coal assets by listed companies to private buyers is “window dressing” and “greenwashing” that achieved nothing towards a zero-carbon world, the boss of the world’s biggest investment house has claimed.
Larry Fink, of BlackRock, which manages $9.5 trillion of people’s savings, said that nothing would be achieved unless private companies were held to the same standards as publicly listed ones. “We’re fooling ourselves,” he told the Green Horizon Summit taking place alongside Cop26.
He described the disposal of carbon-producing assets to private companies as “the biggest capital markets arbitrage ever . . . It doesn’t change the world at all. In fact, it makes it worse because it moves assets from publicly disclosing companies to opaque private enterprises. If we are serious about a decarbonised world, we can’t just ask public companies to move forward without the rest of society.”
Oil companies including BP, Shell and BHP are selling oil and gas producing assets, with private companies eagerly snapping them up, including Ineos and the private equity-backed Siccar Point Energy in the UK.
“More hydrocarbon assets have been sold to private companies in the last two years than at almost any time ever,” Fink said, adding that investors needed to work with oil companies on the transition to renewable energy rather than simply selling their shares: “Hydrocarbon companies are part of the solution, not part of the problem.”
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Fink warned that the price of crude would rocket if western oil companies ceased investing in oil and gasfields too rapidly. That would lead to oil at $120 or $140 a barrel, he said, while pushing production to countries such as Saudi Arabia, Russia and Iran. Crude oil costs about $85 a barrel at present.
BlackRock also said that it had raised a target-beating $673 million for an infrastructure fund with backing from the French, German and Japanese governments to invest in climate-focused projects such as renewable energy in emerging markets.
