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BlackRock Sustainable Investing
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.
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.
Sustainability is BlackRock’s standard for investing
Our investment conviction is that climate risk is investment risk, and that integrating climate and sustainability considerations into investment processes can help investors build more resilient portfolios and achieve better long-term, risk-adjusted returns.
We believe that society is on the cusp of a transformational change towards sustainability. Companies, investors, and governments must prepare for a significant reallocation of capital. BlackRock’s sustainability strategy focuses on two structural themes driving this change.
Climate Transition
A transition to net zero demands a transformation of the entire economy. All companies will be profoundly affected by this change. While the transition will inevitably be complex and difficult, it is essential to building a more resilient economy that benefits more people.
Stakeholder Capitalism
It is clear that being connected to stakeholders enables a company to understand and respond to the changes happening in the world.
How to invest sustainably
At BlackRock, sustainable investing spans a range of strategies that combine traditional investment approaches with environmental, social and governance (ESG) insights to seek to deliver both financial and purpose-driven outcomes.
We draw a clear distinction between dedicated sustainable investing products and the process of integrating sustainability-related data or insights into existing investment processes.
We are passionate about providing clients a clear picture of how sustainability-related issues affect risk and long-term financial performance.
As a fiduciary investor, we work on behalf of our clients, the asset owners. As a large investor, we are able – and feel a responsibility – to monitor the companies in which we invest and to engage with them constructively and privately where we believe that would help preserve clients’ interests.
Capital at risk. This information should not be relied upon as investment advice, or a recommendation regarding any products, strategies. 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.
What is ESG investing?
BlackRock believes that investments that consider E, S and G metrics can help you pursue long-term success in your portfolio and contribute to a more sustainable world.
To navigate the evolving sustainable landscape, investors require new guidelines, definitions and frameworks.
1 BlackRock Sustainable Investing, as of March 31, 2021. All values in $USD.
* Comprised of ESG Broad, ESG Thematic, Impact strategies and selected priority screened products.
** For more information on the Principles for Responsible Investment (PRI) Reporting Framework and their methodology, please visit: https://www.blackrock.com/corporate/sustainability/pri-report
Climate Investing Terms
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Incorporating financially material environmental, social, and/or governance information into investment research and decision-making, based on the conviction that sustainability-integrated portfolios can provide better risk-adjusted returns to investors.
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Gases that trap heat in the atmosphere, such as carbon dioxide, methane, and nitrous oxide. Emissions result from a variety of human activities (e.g., energy generation, transportation, industrial processes).
Source: Greenhouse Gas Protocol, 31 March 2021. -
Engagement with public companies to promote corporate governance practices that are consistent with encouraging long-term value creation for shareholders. Engagement and voting provide shareholders an opportunity to express their views
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Reducing nearly all human-caused emissions and balancing out remaining emissions with carbon removal (e.g., restoring forests, carbon capture and storage). A global net zero commitment establishes an aggregate timeline for achieving the well below 2°C target called for in the Paris Agreement. Many country and corporate net zero commitments target 2050, consistent with global targets to avoid catastrophic outcomes from climate change.
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International agreement to keep the increase in global average temperature to well below 2°C above pre-industrial levels while endeavoring to limit warming to 1.5°C, the scientifically backed threshold to prevent the most destructive effects of climate change. Each country must determine, plan, and regularly report on the contribution that it undertakes to mitigate global warming.
Source: United Nations Framework Convention on Climate Change, 31 March 2021 -
Increased risk to companies’ assets and activities caused by the direct impact of changing weather patterns and natural catastrophes
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Temperature alignment reflects how closely aligned a business, government, or portfolio is to a 2050 net zero economy. Temperature alignment is a forward-looking measurement. In other words, it is measured by looking at emissions today as well as the potential of the emitter to reduce their emissions.
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Impact of the transition to a low-carbon economy on a company’s long-term profitability (i.e., decreased profits for energy).
Source: BlackRock, 31 March 2021.
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