Good morning.
BlackRock CEO Larry Fink is making a strong statement on climate change at the start of the new decade. In his letter to CEOs yesterday, the man who runs the world’s largest asset manager said: “We are on the edge of a fundamental reshaping of finance. The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.”
So what is BlackRock doing about it? Fink said the company will make “sustainability integral to portfolio construction and risk management,” exit “investments that present a high sustainability-related risk, such as thermal coal producers,” launch “new investment products that screen fossil fuels,” and strengthen “our commitment to sustainability and transparency in our investment stewardship activities.”
That’s a big deal. But it’s not as big as it appears at first blush. That’s because much of what BlackRock sells are index funds, which by definition, include all the stocks in the index. It can’t just remove an S&P 500 company from the S&P 500 index because it decides it’s not “sustainable.” Indeed, by virtue of its size and its passive method of investing, BlackRock will remain one of the world’s largest investors in fossil fuel companies.
Still, Fink’s letter is an important sign of where the world of finance is headed. An increasing group of investors wants to know their money is going to companies that contribute to solving the climate problem. And it sounds like BlackRock will create new products that enable them to do just that. Precisely what that means, how far it goes, how it gets done, how “sustainability” gets measured, etc., all remain to be seen. But the direction is clear.
On a separate note, today is a very big day at Coins2Day. This morning, we launched a redesigned website, and an immersive video hub featuring our exclusive executive interviews. Our next magazine issue will also feature a completely upgraded design that hails back to our founding 90 years ago, with an original art cover. New apps for iOS and Android are coming, too. We have also expanded our journalism, and we are putting up a registration wall that eventually will become a paywall. We believe that in business, it pays to know, and we will be asking our readers to contribute to the cost of our best journalism.
As we go down this path, we are committed to giving you, our readers, what you want and need. So more than ever, we want to hear from you. Send me your thoughts.
More news below. And you can watch the Coins2Day team ring the bell at the close of yesterday’s New York Stock Exchange trading session here.
Alan Murray
@alansmurray
[email protected]
TOP NEWS
Airbus Overtakes Boeing
Airbus is now officially the largest plane maker in the world, after Boeing announced Tuesday that 2019 saw the lowest number of orders and deliveries since 2008, following the grounding of its 737 Max jet. In fact, cancellations resulted in negative 87 orders for the year. The figures came a day after the company's new CEO, David Calhoun, assumed the job. FT
Big Bank Profits
The biggest U.S. Banks fared well last quarter—so well, in J.P. Morgan's case, that the bank reported it had its most profitable year on record. "The U.S. Consumer remains in very strong shape," said the company's CFO. Profits for the fourth quarter rose 21%. Citigroup also had a strong quarter, with profits rising 15%, while Wells Fargo's profits dropped on a legal charge. WSJ
Trade War Truce
The U.S. And China are set to officially halt their trade war on Wednesday, in the form of a "phase one" deal. It commits China to making $200 billion in extra purchases of U.S. Goods, in exchange for a hold on further tariffs among other moves, but falls short of erasing the last two years of tit-for-tat tariffs and trade spats. FT
End of the Nuclear Deal
The deal to limit Iran's nuclear capabilities took another hit on Tuesday, as Britain, France, and Germany formally accused the country of breaking the 2015 agreement, opening the way to official UN sanctions being reimposed. That launches 60 days of negotiations with Iran about the deal. But it wasn't a surprise: the official move had been expected at the start of the month, but was delayed after the killing of the Iranian commander Qassem Soleimani. New York Times
AROUND THE WATER COOLER
Flybe Fallout
The bailout of Fylbe, a British airline that serves many regional routes in the country, has drawn the ire of competing airline bosses, including Willie Walsh, the chief executive of IAG, which owns British Airways. Walsh branded the bailout a "misuse of public funds." Meanwhile, politicians were debating whether cheaper domestic flights fits with the U.K.'s climate goals. BBC
The Ghosn Conspiracy Continues
Carlos Ghosn, the executive-turned-fugitive, claimed Wednesday morning from Lebanon that the French ambassador—Ghosn holds French citizenship—warned him after his arrest in Tokyo that Nissan was "turning against you." Nissan denies the accusation. Reuters
Amazon Lifts FedEx Ban
The retailer told its merchants that they could use FedEx's ground shipping networks for orders under the Prime membership program again on Tuesday, after a month-long ban amid a standoff between the two companies. Amazon said in December that the ban was because FedEx was not delivering Prime orders fast enough. WSJ
The Eiffel Tower Scam
In the years after the Eiffel Tower was constructed—not initially popular, it was once called "a truly tragic street lamp"—a career con-man named Victor "The Count" Lustig set out to sell it, not once, but twice. His audacious efforts hold lessons for why people continue to fall for scams again and again. Coins2Day
This edition of CEO Daily was edited by Katherine Dunn.
