If you felt the earth tremble a little bit in Manhattan on Tuesday morning, it was likely caused by the sheer heft of vast amounts of money starting to shift. “Seismic” is the only word to describe the recent decision of the asset-management firm BlackRock to acknowledge the urgency of the climate crisis and begin (emphasis on begin) to start redirecting its investments.

By one estimate, there’s about eighty trillion dollars of money on the planet. If that’s correct, then BlackRock’s holding of seven trillion dollars means that nearly a dime of every dollar rests in its digital files, mostly in the form of stocks it invests in for pension funds and the like. So when BlackRock’s C.E.O., Larry Fink, devoted his annual letter to investors to explaining that climate change has now put us “on the edge of a fundamental reshaping of finance,” it marked a watershed moment in climate history.

He’s right about the financial future, of course—one can’t look at the clouds of smoke now obscuring the Australian continent and come away thinking that we can maintain our present course. But anyone paying attention—which includes investment-fund C.E.O.s—has known the score for years. What’s changed now are a couple of factors.

For one, fossil-fuel stocks have begun to drag down portfolios. As the Times observed, “Had Mr. Fink moved a decade ago to pull BlackRock’s funds out of companies that contribute to climate change, his clients would have been well served. In the past 10 years, through Friday, companies in the S&P 500 energy sector had gained just 2 percent in total. In the same period, the broader S&P 500 nearly tripled.”

But, at least as important, public pressure just keeps mounting. Activist campaigns have been working to make the financial industry start to pay attention. (I’m involved with one, and was among those arrested, on Friday, after a sojourn in the lobby of a Chase branch.) In the past few months, Goldman Sachs, Liberty Mutual, and the Hartford Financial Services Group, Inc., have all put forth new climate policies, and the European Investment Bank—the largest international public bank in the world—announced that it would stop lending to fossil-fuel projects altogether.

Meanwhile, more and more people around the world have started questioning their financial advisers. Climate change, Fink said in his letter, is “almost invariably the top issue that clients around the world raise with BlackRock.” And BlackRock’s clients aren’t the only ones concerned, so you may well see Vanguard and State Street, the other asset-managing behemoths, following this lead in the months to come.

BlackRock’s actual policy changes are modest compared with Fink’s rhetoric. At least at first, the main change will be to rid the firm’s actively managed portfolio (about $1.8 trillion in value) of coal stocks; but coal, though still a major contributor to climate change, is already on the wane, except in Asia. The companies that mine it have tanked in value—even Donald Trump’s coddling has been unable to slow the industry’s decline in this country. So an investor swearing off coal is a bit like cutting cake out of your diet but clinging to a slice of pie and a box of doughnuts.

And Fink is apparently stuck in a decade-old time warp, suggesting on CNBC that “natural gas plays a very large role in the energy transition.” This is also the new official position of the American Petroleum Institute; sadly, the science shows that fracking for natural gas releases large amounts of methane, the second-most significant contributor to climate change.

The other weakness of the plan is that it doesn’t directly address BlackRock’s main business, which is passive index funds. The company has previously maintained that it can’t do anything about the contents of those indexes. But BlackRock’s announcement suggests that this position is changing. In the months ahead, I’d be surprised if the firm didn’t persuade Standard & Poor’s and other index makers to produce “sustainable” versions of their main products—at which point, if BlackRock began nudging its biggest customers into those investments, the shift of money would be far greater.

But BlackRock is so enormous that the signal it sent will likely be heard even through the layers of detail. “I, for one, see this as the beginning of the end for the fossil-fuel system,” Kingsmill Bond, an analyst who used to work at Citibank and Deutsche Bank, and is now with the London-based Carbon Tracker Initiative, told me. “Who, now, will want to hold the stranded assets of the fossil era?”

His observation, he said, is based on what investors call the “greater fool theory.” “Many people hold assets on the expectation that they will be able to sell them to someone else. And now the world’s largest asset manager has very publicly stated that ‘a significant reallocation of capital’ will take place sooner than most anticipate—indeed, ‘because capital markets pull future risk forward, we will see changes in capital allocation more quickly than we see changes to the climate itself.’ ”

So, Bond explained, “If you have a gas network or a coal ship or a diesel-car factory, Fink is essentially saying that there will very shortly be no buyers for these assets. And, because markets think that one through, it means that the next time you try to refinance your loan on these assets, or the next time you try to sell them, you will struggle. In fact, that is how capital markets pull risk forward.”

There is still much work to be done. For today, though, it’s enough that the biggest guy on the block has begun knuckling under to reality—a reality that Fink acknowledges will only grow larger. “This dynamic will accelerate as the next generation takes the helm of government and business,” he wrote. “As trillions of dollars shift to millennials over the next few decades, as they become C.E.O.s and C.I.O.s, as they become the policymakers and heads of state, they will further reshape the world’s approach to sustainability.”

It’s come late—too late to save the Arctic, too late to save the species that have likely gone extinct in Australia’s fires, too late to save the homes of millions of people around the world forced to flee them amid withering droughts and rising seas. But if, for a moment, you want to feel a little hopeful about the future of the climate, then today is your day.

Bill McKibben

First published by The New Yorker, 16 January 2020