Multi-trillion dollar investment firm Blackrock is heavily invested in a number of Chinese coal companies accused of environmentally destructive practices, according to an Energydesk analysis.
The news comes days after the fund warned that investors can no longer ignore the impacts of climate change and impacts on water on their portfolios.
“Climate factors have been under-appreciated and underpriced because they have been perceived to be distant [problems],” Blackrock director Ewen Cameron-Watt said in a recent research note.
Yet our analysis reveals the firm – also a major shareholder in oil giant Exxon – holds positions worth around $1.5bn spread across eight coal companies listed on the Hong Kong stock exchange.
It is quite simply one of the industry’s biggest western investors.
The coal boom in China this century has been the driving force behind the massive increase in global greenhouse gas emissions, the cause of climate change.
Aside from the impact on climate change and air pollution, coal firms in China have also been involved in a string of environmental controversies — from projects in water-starved regions to unreported chemical spills.
Stake in every coal major
Bloomberg data shows Blackrock is especially invested in Shenhua Energy, the world’s biggest coal miner, with its 7% stake valued at around $540 million.
The firm stopped extracting ground-water for a giant coal project following a recent Greenpeace investigation into the impacts on the region.
Blackrock’s roughly $450m stake in Huaneng Power International also represents more than 9% of the coal company’s shares.
And it owns 8% of Huadian – worth about $105m – and nearly 5% of China Coal Energy.
In fact, it appears as though Blackrock has stake in every single coal company listed on the Hong Kong stock exchange.
The investments in Chinese coal may pose a financial as well as reputational risk for the US fund.
The Chinese coal industry has fallen off a cliff in the last two years as the country has grappled with low commodity prices caused by huge oversupply.
Indeed for miners and power producers the country’s massive coal glut coupled with hundreds of projects in the pipeline threatens a sectoral crisis.
Recent steps to curtail supply have seen coal prices recover in the past few months, but many of them measures are temporary.
In fact, significant new mining capacity remains due to come on-stream in the coming years even as demand continues to fall.
We will update this piece with comment from Blackrock including details of which of the investment giant’s funds hold the China shares.
The data was taken from Bloomberg on August 29th 2016.