The energy system is rewiring, and the world is shifting to adapt. Structural forces associated with the low-carbon transition – technological innovation, consumer and investor preferences, and policy initiatives – are reshaping production and consumption, at different paces, in different regions.
We see significant investment opportunities and risks for our clients. As a fiduciary, it is our role to seek optimal returns and outcomes for our clients in line with their investment choices.
Tracking the low-carbon transition
The investment landscape is being shaped by big structural changes, or mega forces, that we think could create both investment risks and opportunities across public and private markets.
Our approach
BlackRock’s approach to sustainable investing and the transition to a low-carbon economy is rooted in our fiduciary duty to clients. We start with clients’ investment objectives, provide choice to meet their needs, and seek the best risk-adjusted returns within their mandates. This is the foundation upon which we built BlackRock into the most trusted asset manager in the world1 – a total focus on our clients, upheld by our respect for their diverse preferences and uniqueness.
We underpin all of these with rigorous and dynamic research, data, and analytics. We see the low-carbon transition having implications for macroeconomic trends and portfolios; we provide clients with insights and tools to help them navigate this complex landscape.
Our capabilities
To date, BlackRock offers 500+ dedicated sustainable products and solutions across index and active platforms, with a combined USD1 trillion in sustainable assets under management2.
Based on varying sustainability characteristics, our sustainable products are organized into four main categories, ranging from foundational approaches like screened and uplift, to more active strategies such as thematic-focused and impact-oriented. This wide spectrum enables our clients to choose strategies that best align with both their financial and sustainability objectives.
To serve our clients, we mobilize sustainable and transition specialists firm-wide, whose expertise spans from research to investment, to provide customized insights, data, and investment and technology choices.
Why does the low-carbon transition matter for our clients?
The low-carbon transition is one of the mega forces that will shape the future investment landscape.
Technological innovation, consumer and investor preferences for lower-carbon products, and shifts in government policies are reshaping production and consumption and spurring capital investment into the low-carbon transition.
We developed the BlackRock Investment Institute Transition Scenario, our framework to track the transition.
We believe the transition will spur a massive capital reallocation, whose shape and speed will be continuously driven by an interplay of these three structural forces:
AI-driven development and cooling needs in emerging markets have led to a surge in power demand.
Source:
Forward-looking estimates may not come to pass. BlackRock Investment Institute, with data from the International Energy Agency, JP Morgan, Goldman Sachs, Bank of America, Schneider, Semianalytics, Bernstein, McKinsey, Boston Consulting Group, and BlackRock’s Global Infrastructure and Fundamental Equities team, December 2024. Notes: This chart shows the estimated additional power demand per year between 2023 and 2030. The global total marginal power demand includes sectoral power demand data from the IEA’s World Energy Outlook (WEO) in the Stated Policy Scenario, October 2024. The median power demand for data centers is calculated by the BlackRock Investment Institute using data from the third-party sources mentioned, as of May 2024. Data center power demand includes those from traditional data centers and artificial intelligence (AI) computing/dedicated AI data centers and excludes consumption from cryptocurrencies and data transmission networks. Data centers demand estimates noted as supply are based on assumptions of GPU shipments, and those noted as demand estimates are based on retail market demand.
Geopolitical tensions and trade protectionism reshape markets for energy technology and critical commodities.
Source:
BlackRock Investment Institute with data from International Energy Agency (IEA), October 2024. Notes: The bars show the ratio of China’s manufacturing capacity for various items compared to domestic and global demand for those items. Manufacturing capacity refers to total manufacturing capacity without discounting utilization factors. EV refers to electric passenger cars and pickup trucks. Battery demand includes all EV types and stationary storage.
A series of cascading geopolitical shocks has spurred a recalibration of energy policy priorities, featured by security and pragmatism.
Source:
BlackRock Investment Institute, December 2024. Notes: The chart illustrates our view of the likely change — if any — in the priority assigned to the low-carbon transition relative to other policy objectives in each jurisdiction, based on the stated preferences of 2024 election winners. The size of each block corresponds to the total level of emissions. EU refers to the European Union, although climate and energy policy is shared between the European Parliament and member states.
What we’re hearing from clients
Clients are asking for our perspective on the long-term mega forces – including the transition to a low-carbon economy – that will impact portfolios, for analytics that will help them measure and track those forces, and for products across the whole portfolio that will help them capitalize on opportunities to meet their investment objectives.
Clients remain committed to their sustainable or transition objectives
Our 2025 Global Insurance Report highlights how clients are looking to balance long-term financial performance with the low-carbon transition.
70%
increased their conviction in sustainable and transition investing objectives
55%
view clean energy infrastructure as the brightest opportunity in sustainable & transition investing
In APAC, we found that clients are underpinned by pragmatism and progressiveness.
80% of our largest institutional clients have set a climate goal, in various forms ranging from a net-zero commitment to a carve-out allocation dedicated to sustainable and transition solutions.
Driven by a mix of policy incentives, climate targets, and financial interests, APAC clients are inclined towards a pragmatic approach that seeks to balance sustainability objectives with financial performance goals.
They are also evolving their sustainable & transition allocations from building blocks only to a more comprehensive, whole-portfolio approach.
Hear from business leaders and investors leading the transition
BlackRock speaks to thought leaders and industry experts from around the globe about the biggest trends moving markets. Listen to companies, business leaders and investors at the forefront of the transition to a low-carbon economy.
AI and the Energy Grid: Solving for AI's Power Needs
The rapid advancement and adoption of AI is poised to drive a significant increase in power demand, which could redefine energy consumption as we know it. We respond to how the energy sector is equipped for the AI power revolution, as well as the roles of different asset classes in the build-out and future of AI?
Low Carbon Opportunities in Infrastructure Investing
Low carbon infrastructure is increasingly becoming an area of interest for investors in both public and private markets. We explore how the low-carbon infrastructure plays a role in the evolving energy investing landscape.
Navigating the Golden Age of Infrastructure Investing
We say this is the “golden age of infrastructure investing” – from data centers powering AI to pipelines driving energy security and railroads transforming transportation, infrastructure is proving to be one of the most durable and exciting asset classes in capital markets today. We explain why infrastructure investing is having a moment and how it connects to AI.
More transition resources
Energy transition outlook
Our latest view on how the transition is set to spur capital reallocation as energy systems rewire
Climate and decarbonization stewardship
Our dedicated stewardship program to clients who explicitly direct us to invest with decarbonization objectives.
Climate resilience: an emerging investment theme
Moving beyond risk assessments to climate resilience as an investment theme.