BlackRock’s inaugural Global Impact Annual Report
Reflecting an unprecedented period in history, the report captures not only the reality of the immense challenges we face amid the ongoing global pandemic, but also the resilient responses that so many impact enterprises offer as solutions.
Our approach to impact investing in public equities
We believe an impact investing strategy in public equities should be built on the foundational concept of “additionality.” Additionality in this context means that, but for this contribution, that outcome would not have occurred, so impact is created. It’s key to the impact approach. Explore how innovative businesses deliver positive impact to people and the planet in two examples below.
Key examples
01
Additionality is the key to driving impact
Our impact strategy in public equities is based on three related pillars of additionality - additionality from the investee, investor and asset class. Through this foundational framework, impact investors can holistically support an impact enterprise’s enduring success.
02
Impact on people: solutions spotlight
The Global Impact team invests in companies whose core products and services address great societal issues as identified by the UN Sustainable Development Goals and Targets.
03
Impact on the planet: solutions spotlight
The Global Impact team invests in companies whose core products and services address great environmental issues as identified by the UN Sustainable Development Goals and Targets.
Additionality is the key to driving impact
For a company to provide additionality based on our standard, a majority of its products and services must address a need that is unlikely to be fulfilled by others (such as competitors or governments), thereby creating a genuine impact that addresses that need. We also require additionality from ourselves as investors. With a long-term, ownership mindset, impact investors in public equities create impact by providing an exit for private enterprises pursuing impact; supplying the capital needed for impact companies to grow; engaging with companies to enhance impact outcomes; increasing the visibility of undervalued impact companies, and democratizing access to impact investing. At the asset class level, by offering impact investing through public equities, a broad new cohort of investors can participate and provide much needed capital to solve some of the world’s great problems. It is long past time for the democratization of impact investing.
The more your company can show its purpose in delivering value to its customers, its employees, and its communities, the better able you will be to compete and deliver long-term, durable profits for shareholders.
Impact on people: solutions spotlight on Bank Rakyat
Based on our research as of 2020, Bank Rakyat is the largest microlender and financial services provider in Indonesia, where approximately half the adult population remains unbanked. In addition to microlending, the bank provides services including financial literacy training programs, savings vehicles and insurance products, helping to foster financial resilience, empowerment and economic opportunity for underserved communities. Bank Rakyat’s microlending business targets micro, small and medium-sized enterprises, rural communities and underserved individuals. Indonesia is an archipelago with over 10,000 islands; approximately 6,000 of them are inhabited. Due to the dispersed population across these thousands of islands, it is difficult to scale traditional business models that rely on physical locations. Bank Rakyat has built a financial agent network that allows its services to reach even the most rural areas of Indonesia’s islands, reflecting an innovative business model specific to local needs.
Target 8.3
Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro, small and medium-sized enterprises, including through access to financial services.
Target 10.1
By 2030, progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average.
Impact on the planet: solutions spotlight on Vestas Wind Systems
As a wind energy and technology leader, Vestas designs, manufactures, installs and services wind turbines globally. It is responsible for a diverse portfolio of wind turbines that can operate in multiple environments, even in extreme weather conditions, onshore and offshore.1 Vestas’ strategy seeks to expand the world’s use of wind energy through its leading, efficient technology and lower-cost business model. Vestas’ advanced technology also increases the efficiency of renewable energy generation, with a single wind turbine producing 30 to 50 times more energy than it consumes in a lifetime.2 Wind energy grew by 23% annually between 1990-2018, and we believe wind power is positioned for continued, structural growth.3 Since inception in 1981 through 2020, Vesta’s operations have avoided 1.4 billion metric tons of CO2 emissions,4 which is the equivalent of avoiding the emissions from 1 billion passenger vehicles driven in one year.
Target 7.2
By 2030, increase substantially the share of renewable energy in the global energy mix.
Target 13.1
Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries.
Download the full Global Impact Annual Report
Reflecting an unprecedented period in history, the report captures not only the reality of the immense challenges we face amid the ongoing global pandemic, but also the resilient responses that so many impact enterprises offer as solutions.
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