Larry Fink says BlackRock “isn’t perfect”. Linking costs to diversity goals could help

Black rock has for the first time linked the cost of by leveraging bank loans according to three parameters: how many women hold positions of responsibility, black and Latino employment, and how much she invests in assets that benefit society and the environment.

The interest rate and fees that BlackRock pays lenders on any amount it draws from its $ 4.4 billion primary credit facility will increase or decrease each year from 2022 depending on the number of objectives achieved. The Wall Street Journal was the first to report the story.

Black rock (BLK) targets a 30% increase in black and Latino employees in the United States by 2024, he said in a statement to CNN Business. It also aims to increase the percentage of women in leadership positions globally, currently 30%, by 3% per year.

“Just as we ask other companies, we have a long-term strategy to improve diversity, equity and inclusion at BlackRock,” he said. Fink added that part of the strategy includes “mitigating biases” in his recruiting and talent management.

The company’s progress in strengthening investments in companies with high environmental, social and governance (ESG) ratings could further affect its borrowing costs. He wants to manage sustainable assets worth $ 1 trillion by 2030, up from $ 200 billion today.

“The ESG linked credit facility reinforces BlackRock’s commitment and responsibility to achieve certain sustainability goals,” the company said.

According to a spokesperson, it will have to achieve at least two of its three objectives and will not be able to “significantly underperform” the third for a tariff advantage to materialize. “If BlackRock significantly underperforms two of the three, a price penalty kicks in,” added the spokesperson.

The rate on the loan, which is a reserve facility that is not used regularly by the business, could also remain unchanged if it narrowly reaches its targets.

BlackRock’s commitment could provide a major boost to sustainability-related lending, which has grown in popularity in recent years as companies face increasing pressure from shareholders to adopt better business practices for the company and the environment.

Britain’s largest supermarket group last year Tesco (TSCDF) tied interest payments on a £ 2.5 billion ($ 3.5 billion) revolving credit facility to environmental goals, including reducing emissions, using renewables and managing waste food.
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BlackRock – which ended 2020 with nearly $ 8.7 trillion in assets – refined his concentration on ESG investing last year. It is committed to exiting assets that pose high sustainability risks, such as thermal coal, and has launched new products that filter fossil fuels and allow clients to invest in companies with top ratings. ESG.

Earlier this year, BlackRock said it would ask companies to disclose plans on how their business models would be compatible with a “net zero economy” and that it would publish the proportion of its assets aligned with net emissions of zero greenhouse gases.

Fink reaffirmed that commitment on Wednesday and said the company aims to have net zero emissions on all of its assets under management by 2050.

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