BlackRock stays out of APG warning Korea about climate risks

BlackRock's sign hangs above its building in New York in this 2018 file photo. Reuters-Yonhap

By Park Jae-hyuk

BlackRock did not add its signature to a letter sent last week by APG Asset Management and 22 other members of Climate Action 100+ to Korea's Presidential Committee on Carbon Neutrality, warning the government and businesses about their “insufficient efforts” in the country's transition to net-zero emissions.

The world's largest asset manager is a major shareholder of some of the top Korean companies, such as Samsung Electronics, SK hynix, Naver and LG Chem.

However, the name of one of the most important members of Climate Action 100+ was absent from the list of signatories in the letter disclosed Monday, in contrast to APG and three other leading institutional investors ― BMO Global Asset Management, EOS at Federated Hermes and Sumitomo Mitsui Trust Asset Management ― that are engaging with Korean companies through the global investor-led initiative, which aims to ensure that the world's biggest greenhouse gas emitters take action on climate change.

In the letter, the signatories emphasized their influence on the global capital market, introducing themselves as institutional investors responsible for some $6.7 trillion in assets under management and actively engaging with Korean companies on climate change.

In particular, APG, which is said to have invested 10 trillion won ($8 billion) in domestic companies, plans to carry out shareholder engagements directed at these top Korean companies through Climate Action 100+. These engagements will begin later this year and urge them to make visible efforts to reduce their carbon emissions.

“Investors are engaging constructively with South Korean companies to help them make a successful transition to net-zero emissions, mitigate climate risk and protect long-term value,” APG Head of APAC Responsible Investment & Governance Park Yoo-kyung, who led the recent letter campaign, said in a press release.

Before sending the latest letter, the Dutch pension fund sent a separate letter to the Korean government in August to express its concerns about private coal-fired power plants under construction here. It also sold its entire stake in the Korea Electric Power Corp. (KEPCO) last year, citing the state-run company's construction of coal plants in Vietnam.

The 23 signatories to the recent letter reiterated the fact that private coal plants will put assets at risk of becoming stranded and unprofitable, due to low utilization rates and the extra efforts necessary to offset the emissions incurred.

“For many of the companies we are engaging with, the outcome of national South Korean policy on energy and climate change is critical to the achievement of their net-zero ambition,” the letter reads.

BlackRock's absence, however, could limit the impact of the letter and APG's planned involvement in the management of local companies.

The world's largest asset manager has faced questions from environmental activists about its own environmental, social and corporate governance (ESG) strategies. Earlier this year, it was accused of investing in an Indonesian palm oil producer that faced allegations of seizing land from local farmers.