Events will accelerate energy transition, Fink says
The pandemic strained things, but it’s Russia’s invasion of Ukraine that “has put an end to the globalization we have experienced over the last three decades,” BlackRock CEO Larry Fink wrote in his annual letter to investors.
The world’s largest asset management firm, BlackRock has more than $10 trillion in investments, so Fink’s pronouncements carry a great deal of weight.
“The ramifications of this war are not limited to Eastern Europe. They are layered on top of a pandemic that has already had profound effects on political, economic, and social trends. The impact will reverberate for decades to come in ways we can’t yet predict,” Fink wrote.
Cutting Russia off from the global economy and community has been a major project for private corporations as well as national governments, Fink said.
“These actions taken by the private sector demonstrate the power of the capital markets: how the markets can provide capital to those who constructively work within the system and how quickly they can deny it to those who operate outside of it,” he wrote.
Large parts of Europe remain dependent on oil and natural gas from Russia. Energy security has joined the energy transition as a top global priority, he noted.
“In response to the energy shock caused by the war in Ukraine, many countries are looking for new sources of energy. In the US much of the focus is on increasing oil and gas supply, and in Europe and Asia, coal consumption may increase over the next year. This will inevitably slow the world’s progress toward net zero in the near term. Longer-term, I believe that recent events will actually accelerate the shift toward greener sources of energy in many parts of the world.”
While globalization as we know it may be over, Fink still has faith in the larger global project to do good.
“I remain a long-term believer in the benefits of globalization and the power of global capital markets,” he wrote. “Access to global capital enables companies to fund growth, countries to increase economic development, and more people to experience financial well-being.”