Sustainability at BlackRock

Innovation on the road to net zero

We’re committed to helping more and more people experience financial well-being, and we believe the transition to a net zero economy by 2050 is a big part of that ambition. That’s why we’re dedicated to advancing climate innovation, research and analytics – to help our clients invest sustainably and build a net zero economy that serves us all.

Today, the world emits about 60 gigatons of greenhouse gas a year to power the economy and our lives.

So, think the food we eat, how we get places, where we work, how we live.

We can’t turn all of that off overnight but we can take steps to get on a path to a net zero world.

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Title: The net zero economy is arriving

Net zero is about reducing greenhouse gas emissions so that over time we can achieve an overall balance between emissions produced, and the emissions removed from the overall atmosphere. So, for every ton of greenhouse gas we emit into the air, we would take a ton out.

(Graphic text: Net zero = Greenhouse gas emissions produced ≤ emissions remove)

(Graphic/text animation) The latest science shows that if we reach net zero by midcentury, essentially if we achieve the goals outlined in the Paris Agreement, it would limit global warming to well below 2°C versus pre-industrial levels.* If we exceed that level, scientists say that we’ll suffer from the most detrimental climate impact.

*Source: Climate Council, “What does net zero emissions mean?,” 2020

(Graphic/ text animation)

To date, 127 governments around the world and over 1,000 companies have made or are preparing to make net zero commitments. And we expect that number to go up.

*Source: Climate Action Tracker, “Warming Projections Global Update” December 2020 and UN News, “UN chief stresses need for greater speed to achieve carbon neutrality,” November 9, 2020

This is also being reflected in the financial system. Regulators are making climate risk disclosure mandatory, central banks are stress testing for climate risk, and policymakers around the world are collaborating to achieve common climate goals.

Climate change is a collective problem that requires collective global action. People have to understand that achieving net zero in 2050 isn’t something we can start in 2049, we have to start today.

Lastly, and most importantly, as with any transition, we have to make sure it’s a just transition. We really have to work together to make sure that no one group, whether it’s a community or an industry gets disproportionately left behind.

The bottom line is that achieving global net zero emissions by 2050 is our best chance at mitigating the worst impacts of climate change. // This is going to a large structural change in our economy. // And companies that manage to evolve and adapt their business models are going to be rewarded by the financial markets over the long term.

Watch our recent video featuring Jessica Tan, Head of Corporate Strategy, and read our new 101 guide to learn more about the net zero transition.

Hi, my name is Steve Monnier and I'm the Client Sustainability Specialist here at BlackRock Australia. If it feels like the future is running at us, you're probably right. Market sentiment, policy reform, structural changes are transforming the investment landscape at an incredible pace. Our clients within this backdrop are setting more ambitious sustainability goals. They're setting goals to be carbon neutral by 2050. They're calling for greater levels of female participation in leadership roles. And they're also aligning their investments to solve global, environmental and social problems in addition to providing investment returns. In this environment, helping our clients achieve their sustainability and investment goals has never been more important. There are a lot of terms and acronyms in this space, from ethical investing, to responsible investing, or even sustainable investing. And often these terms are used interchangeably and they do mean different things to different people. So this is actually a great place to start. At BlackRock we define sustainable investing as combining the best of traditional investments with insights from society. These are traditionally non-financial insights and we bring this together to generate the best long-term outcomes for our clients. We believe that sustainability related issues can have real quantifiable impacts. So for us, sustainable investing is first about our fiduciary duty to clients. It's about finding ways to integrate sustainability in a way that's consistent with generating long-term financial performance. Secondly, it's about enhancing the way that we invest. It's about improving on traditional investment approaches to incorporate new data, new insights, in a way that drives our understanding of how we can measure and integrate sustainability related issues into being better long-term investors and providing better long-term outcomes for our clients. As we think about how to invest sustainably, we really want to approach it from the perspective of our clients, and they typically come to this from two impulses either to avoid or to advance. And that's really helped inform us with our thinking around developing a sustainable framework here at BlackRock. The first impulse to avoid is typically associated with avoiding exposure to certain companies, certain sectors, such as tobacco or weapons. And the other impulse that we see clients express is to align their capital with positive behaviours, positive outcomes. And increasingly what we see is clients think not just about how they can avoid exposures but also how they can advance their exposures. One of the common misconceptions I hear about sustainable investing is that it's about values. Now that really only tells you half the story. A part of our role is to help our clients reflect their values in their portfolios. But the other part is about adding value. It's about being a better investor and providing better returns. At BlackRock, we aim to be a leader in sustainable investing. Our fiduciary duty demands it. You, our client demands it. And it's about being a better investor. BlackRock has made sustainability our standard for investing and is committed to helping our clients navigate this environment. During 2020, we've been working hard to build sustainable, resilient and transparent portfolios. We've been working hard to also enhance the range of choice that we provide our clients in terms of sustainable solutions. And we've been working hard to enhance the transparency of our voting and engagement activities. For further information, please visit our website BlackRock.com or speak to your relationship manager.

Sustainable Investing – values and value

Steve Monnier, Sustainability Specialist at BlackRock Australia, discusses how the investment landscape is transforming and why – in this environment – it’s never been more important to help our clients achieve their sustainable and investment goals. 

Why it matters

Climate risk is investment risk
Our responsibility to help clients navigate this change impacts everything we do, from managing portfolios to building products to engaging with other companies.
The net zero economy is arriving
This is a historic opportunity to invest in climate innovation, and we believe companies who evolve will be rewarded by financial markets over the long term.
People and planet can prosper together
Reducing environmental damage while boosting innovation enables us to build a more just, inclusive world – one where more and more people can prosper.

How do we advance sustainability at BlackRock?

Sustainable investing is about investing in progress, and recognising that companies solving the world’s biggest challenges can be best positioned to grow. It is about pioneering better ways of doing business, and creating the momentum to encourage more and more people to opt in to the future we’re working to create.

Through the combination of traditional investment approaches with environmental, social and governance (ESG) insights, investors ranging from global institutions to individuals are taking a sustainable approach to pursuing their investment goals.

Capital at risk. All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

By developing expert research and insights

In our products and technology

Through our engagements with companies

Through our business and our people

Larry Fink: We have some parts of the country that are very, very worried about what this transition will mean for their state, their locality, for their jobs. And so, this is not going to be an easy task. But I would say across the board, capital is moving, and it's going to move very rapidly. And I'm very proud that I can tell you right now; every hydrocarbon company in the United States is now focused on this whereas I would say three to four years ago, they weren't. They did not believe it. We are making change, and I would say we're making more rapid change because of Bill and other people who are expressing this openly.

Bill Gates: Well, the bulk of emissions in the decades ahead will come from developing countries. Let's think of it in three tiers. The rich countries: that's Europe, U.S., Japan. The middle income countries; that's where most of humanity lives. That's, you know, China on the high end – high middle income – and India on the low end. And you've got Brazil, Mexico, Indonesia, Vietnam, a lot of the world's population there. And then you have some very poor countries, a lot in Africa. The responsibility to innovate rests entirely on the rich countries, and particularly on the U.S., because the U.S. has the universities, the national labs; it's got the ability to organize risk-laden capital. We will not solve climate change without the rich world driving down dramatically. That will make it economic for the middle-income countries who are not responsible for the historic emissions and who are dealing with more basic needs.

Net zero: A global shift with local impact

Watch Larry Fink, Chairman and CEO of BlackRock, and Bill Gates, Founder of Breakthrough Energy, discuss the complex challenge of reaching net zero emissions and how the transition will spur innovation and accelerate change.

To achieve the global ambition of keeping global warming to 1.5 degrees, we need to rapidly decarbonize our economies to a point where we’ve got net zero emissions by 2050

BlackRock Bottom Line
Decarbonization and the road to a net zero economy

Teresa O’Flynn
Global Head of Sustainable Investing for BlackRock Alternatives Investors

So if we work back, we need to reduce carbon emissions by about 1.7 billion tons each year between now and 2050.
Source: Breakthroughenergy.org, “Getting to zero: The most ambitious innovation effort in human history,” August 2020 https://www.breakthroughenergy.org/our-challenge/getting-to-zero

To put that figure in context, COVID-19, which saw unprecedented disruption to economic activity and travel, saw carbon emissions fall by about two billion tons in 2020. 

Electrification of our energy systems, digitalization and technological advancement are all at the center of achieving decarbonization.

Decarbonization has three major components. Firstly, using less energy. Energy efficiency of equipment, of buildings, of manufacturing but also affecting the demand side so consuming less. Moving towards the shared economy.

Secondly, supplying the world with clean energy, such as green electricity. Also, the supporting infrastructure and storage capacity that’s necessary to deliver a fossil-free grid. Accelerating new energy sources such as hydrogen but also renewable fuels, particularly for those hard to decarbonize sectors such as aviation.

And finally, actively taking carbon out of the system. And this includes nature-based solutions such as reforestation but also developing the technology that will capture carbon from the atmosphere, store it and possibly utilize it.

Governments play a critical role in setting the right kind of policy and regulatory environment. And we’re also seeing ambition increase in the corporate sector. And so far, over 1,500 companies have set net zero targets. We’ve seen industry get together around the trickier to decarbonize sectors such as heavy industry and manufacturing. 

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The bottom line is that the world is on a massive transformational path propelling us towards a zero-carbon and digital future. We believe that this represents a historic investment opportunity and that investors will be better served by being on the forefront of this transition.

Decarbonization and the road to a net zero economy

The world needs to reduce carbon emissions by approximately 1.7 billion tons each year to achieve net zero by 2050. So what is decarbonization, and how will it impact investors? Teresa O’Flynn, Global Head of Sustainable Investing for BlackRock Alternatives, discusses on this episode of BlackRock Bottom Line.

Getting to Net Zero
What is a net zero economy and why do we need it?
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