DAVOS, Switzerland — BlackRock Chairman and CEO Larry Fink feared his annual letter to chief executives would trigger a "severe backlash" against the world's largest investment firm, particularly because many of its clients are big hydrocarbon producers.
Fink warned CEOs earlier this month that an intensifying climate crisis would bring about a "fundamental reshaping of finance," with a significant reallocation of capital set to take place "sooner than most anticipate."
It marked a stunning shift by the world's top asset manager, following growing pressure from investors and climate activists about its investing practices.
"I actually thought we were going to have a severe backlash on this one," Fink said at a World Economic Forum session on Thursday.
That's "because we manage money for countries that are big hydrocarbon producers (and) we manage money in the United States where the states are totally dependent on hydrocarbons for their economy."
"And yet, we can talk about the public narrative, but the private conversations we had with our clients I would say was 99:1 in favour," Fink said.
BlackRock's assets under management totaled nearly $7 trillion in the third quarter of 2019.
In Fink's letter, published Jan. 14, the New York-based investment firm explained how it would avoid investments in companies that have a high sustainability-related risk.
It would also start to exit investments in coal production, introduce funds that ban fossil-fuel stocks and vote against corporate managers who aren't making progress on fighting the climate crisis.
The announcement was largely seen as a major step forward by climate activists, but many wanted the asset manager to expand its commitments to help other financial institutions follow suit.
Fink's comments in Davos, Switzerland came as many of the world's policymakers and business leaders gathered in the luxury ski resort to discuss how best to fight the climate emergency.
The event, which is often criticized for being out of touch with reality, has said it aims to assist governments and international institutions in tracking progress toward the Paris Agreement and the U.N.'s Sustainable Development Goals.
It follows a 12-month period that saw the hottest year on record for the world's oceans, the second-hottest year for global average temperatures and wildfires from the U.S. to the Amazon and Australia.
"This is the beauty of capital markets. When more people believe in something, we bring the problem forward," Fink said Thursday.
"Through that reallocation of capital, we are going to see an overabundance of capital available to mitigate" some of the problems associated with the climate crisis, he said.
Fink said the problem was not going to be capital markets or capitalism, but rather whether governments would have the "fortitude" to act.
— CNBC's Emma Newburger contributed to this report.