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Towards a more sustainable future

We believe sustainability is the new standard for investing. We are committed to making sustainability integral to the way we manage risk, generate alpha and build portfolios - to help investors achieve better long-term, risk-adjusted returns. Learn more about sustainability and how it influences risk and return here.

What is sustainable investing?

Sustainable investing is about investing in progress and recognising that companies solving the world’s biggest challenges may 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.

We view sustainable investing as the combination of traditional investment approaches with environmental, social and governance (ESG) insights to mitigate risk and enhance long-term return.

What is ESG?

ESG is often conflated or used interchangeably with the term “sustainable investing”. We see sustainable investing as the umbrella and ESG as a data toolkit for identifying and informing our solutions.

ESG data is most often categorized as “non-accounting” information because it captures components important for valuations that are not traditionally reported. The valuation of companies has become more complex, with a growing portion tied up in intangible assets. ESG metrics provide insights into these intangibles, such as brand value and reputation, by measuring decisions taken by company management that affect operational efficiency and future strategic directions.

BlackRock Icon Globe
Environmental (E)
Covers themes such as climate risks, natural resources scarcity, pollution and waste, and environmental opportunities
BlackRock Icon Diversification
Social (S)
Includes labour issues and product liability, risks such as data security, and stakeholder opposition
Risk Icon
Governance (G)
Encompasses items relating to corporate governance and behaviour such as board quality and effectiveness

What is driving the growth of sustainable investing?

The number and diversity of investors looking for sustainable opportunities are on the rise for several reasons:
Financial
Future financial decision-makers are asking more of companies and are seeking more sustainable investment solutions.
Choice
Regulators and governments are expanding their focus on incorporating sustainability into investment information and decision making.
Risk
There is growing recognition that ESG research and analysis can potentially identify investment risks and generate excess returns.

Sustainability influences risk and return

A commonly held view is that a return sacrifice is needed when adopting sustainable investing. We disagree – and in fact believe that investing sustainably does not entail a return sacrifice.

Resilience during periods of market volatility

The downturn during the pandemic in the first quarter of 2020 was a key test of this conviction. While this short time period is not determinative, it aligns with the resilience we have seen in sustainable strategies during prior downturns. These results are also consistent with the research BlackRock has been publishing since mid-2018, demonstrating that sustainable strategies do not require a return tradeoff and have important resilient properties.1

Percentage of sustainable indices that have outperformed during downturns2
78 percent
Emerging Markets / energy downturn
21 Jul 2015 – 11 Feb 2016
75 Percent
Fed policy reaction
20 Sep 2018 - 24 Dec 2018
94 Percent
COVID-19 crisis related market selloff
1 Jan 2020 – 31 Mar 2020
81 percent
2020
1 Jan 2020 – 31 Dec 2020

Our sustainable solutions

Sustainable solutions

Four ways to invest sustainably
When it comes to sustainable investing, we offer investors a comprehensive range of solutions, depending on their sustainable and financial goals. We distil investor motivations into a spectrum from Avoid to Advance as a framework to think about different sustainable investing styles.


‘Avoid’ is about minimising or eliminating exposure to certain companies or sectors associated with negative ESG characteristics that could pose reputational or other related risks, or which violate the asset owner’s values.


‘Advance’ is about increasing exposure to positive ESG characteristics. This might include using ESG scores as an additional layer in the traditional investment process or focusing on a specific outcome.

How you can start

01

Replace traditional core exposures with sustainable building blocks.

02

Express your views on structural environmental or social trends.

03

Seek to create positive, measurable impact with your investments.

Why BlackRock for sustainable investing

BlackRock’s purpose is to help more and more people achieve well-being through wealth. We advance sustainable investing because our conviction is that it delivers better outcomes for investors.
Integrated process
Integrated process
We integrate ESG insights and data across asset classes and investment styles.
Sustainable solutions
Sustainable solutions
We deliver sustainable solutions to help our clients achieve their financial objectives.
Investment stewardship
Investment stewardship
We engage companies on sustainability issues that impact long-term performance.
Corporate sustainability
Corporate sustainability
We ensure our firm’s long-term sustainability to deliver for clients and shareholders.

Insights

Below you will find highlights and key takeaways of our conversations at the BlackRock Sustainability Series. We hope you find these insights helpful in increasing your understanding of climate risk and the changes that will follow as the world transitions to a net zero path.

2020 saw historic commitments to achieving net zero carbon emissions. We brought together thought leaders and experts across industries to help us understand why net zero matters and the opportunities for investors

Through the lens of our clients and our fiduciary responsibility, it became very clear to me to state in 2020, that climate risk is investment risk.

We will discuss some of the measures needed, as well as the opportunities in managing and adapting to physical climate risks, some of which will unfortunately be inevitable despite global efforts to decarbonize

There's nothing we can discuss without disclosure, so disclosure is a foundation for discussion. Not just for investors but for the lenders as well. However, disclosure need to focus on materiality.

Regulators, investors and companies themselves, all need to work together to achieve this goal

We believe that the large institutional investors will in future be managing their portfolios against sustainability indexes or climate-oriented policy benchmarks, going forward.

Innovations related to ETFs make it possible for more investors to weave climate exposures into portfolios.

We think that index solutions are going to play a key role in enabling this transition that investors are really looking to put into play.

We see sustainability, and particularly climate-focused, ETFs as the next frontier.

BlackRock Sustainability Series - Getting to net zero

We hosted thought leaders and experts across industries in Asia Pacific to discuss why net zero matters and the investment opportunities the energy transition presents investors to turn risk into opportunity.