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Sustainability: choosing
an investment style

The importance of sustainable investing is growing, as reflected in the proliferation of strategies offered to investors. Which to use depends on the investor’s 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.
ESG Investment Statements. This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This is for illustrative and informational purposes and is subject to change. It has not been approved by any regulatory authority or securities regulator. The environmental, social and governance (“ESG”) considerations discussed herein may affect an investment team’s decision to invest in certain companies or industries from time to time. Results may differ from portfolios that do not apply similar ESG considerations to their investment process.

 


Sustainable investing is gaining in popularity, and with good reason. Investors no longer have to choose between generating returns and adhering to environmental, social and governance (ESG) criteria. Both are possible at the same time (more on this here).

Alongside this, the range of sustainable strategies available to investors has grown. This makes choosing an appropriate strategy more important than ever.

So how do investors identify their investment style when it comes
to sustainability?

The only yardstick is their goal. With this baseline, investors can begin to make sense of the variety of strategies and products offered under the label “sustainable investment solutions”.

  • Screened investing

    Screened investing strategies that rely exclusively on traditional filters. With this approach, investors avoid exposure to companies and industries they are fundamentally opposed to. Examples include weapons, but also fossil fuels or tobacco.

  • ESG investing

    ESG investing strategies that allow for broad investment but give a higher weighting to companies with better ESG scores. Optimised (or enhanced) ESG indices lead the way here and include strategies with extremely low tracking error compared with traditional benchmarks. Investors wanting to improve the carbon footprint of their investment portfolio without fundamentally changing their strategic asset allocation should be in the right place here.

  • Thematic investments

    Thematic investments that can be used to achieve exposure to a specific ESG aspect. Examples are investments in renewable energies or carbon reduction.

  • Impact investing

    Here, investors seek to achieve both financial and non-financial goals, such as funding companies making a significant contribution to advancing sustainable living and working.

BlackRock offers a wide range of active and passive strategies in each of these categories – because investors’ goals are what matter.

But we’re also doing more. Our conviction is that off-balance sheet ESG criteria will play a growing role in assessing the risk and return prospects of investments. We aim to integrate sustainability throughout the BlackRock investment process, so we don’t just offer ESG products. Our ESG Investment Statement was developed for this purpose in 2018 and sets out the guidelines for ESG investing at BlackRock.

We make ESG research and additional data available to all BlackRock investment teams, because it creates a more holistic view of risks and opportunities. Information on environmental, social and governance criteria can fundamentally improve the investment process, regardless of whether it is for an ESG or traditional product.

Mirjam Staub-Bisang
Senior Advisor to BlackRock’s Sustainable Investing Business
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