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Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
Thematic investing is about looking towards the long-term and orienting portfolios towards the big structural changes that will define our era. With that in mind, our BlackRock Investment Institute has named the transition to a low-carbon economy as one of 5 mega forces that we see as structural shifts bringing significant changes in profitability across economies and sectors. The transition to a low-carbon economy is driving an economic transformation spurred by government policy, technological innovation, and consumer preferences.1
Our thematic ETF range can provide clients with solutions to help them achieve their long-term investment objectives while incorporating transition thematic investing considerations.
1 BlackRock, BlackRock Investment Institute (BII), Transition to a low-carbon economy, Accessed at 15/12/2023.
Essential metals have a foundational role in emerging technologies. Minerals, such as copper, lithium, nickel or rare earth possess unique characteristics, necessary for constructing low carbon technologies and renewable energy systems. Coupled with supply chain challenges, this also presents growth opportunities for miners and producers of essential metals.2
2Source: BlackRock Investment Institute (BII), Investment Perspectives: Tracking the low-carbon transition, Page 6, as of July 2023.
Required investment to meet minerals demand in the Net Zero Scenario, 2022-2030.3
There is no guarantee that any forecasts made will come to pass.
Electric cars require six times as many minerals, with an average of 207 kg per vehicle, compared to just 34 kg per vehicle in conventional cars.4
Export restrictions on critical raw materials have increased more than five-fold in the last decade with 10% of global value of exports of critical raw materials now facing at least one export restriction measure.5
3 Source: IEA, Energy Technology Perspectives 2023, as at 30/01/2023.
4 Source: IEA, The Role of Critical Minerals in Clean Energy Transitions, as at 31/05/2021.
5 Source: OECD, as at 31/04/2023.
The iShares Essential Metals Producers UCITS ETF [METL] invests in companies engaged in production of metals which may be required for the global energy sector’s transition from fossil-based systems of energy production and consumption to renewable energy sources.
Risk: The benchmark index only excludes companies engaging in certain activities inconsistent with ESG criteria if such activities exceed the thresholds determined by the index provider. Investors should therefore make a personal ethical assessment of the benchmark index’s ESG screening prior to investing in the Fund. Such ESG screening may adversely affect the value of the Fund’s investments compared to a fund without such screening.
The transition to a low-carbon economy could benefit copper miners as constraints are posed by supply growth. Given the metal’s key role in electrification across renewable energy, electric vehicles and infrastructure buildout demand is expected to grow.6
6Source: BlackRock Investment Institute (BII), Investment Perspectives: Tracking the low-carbon transition, Page 6, as of July 2023.
Global demand for copper is expected to double over the next decade, supported by the deployment of key technologies: the electrification of transport, renewable technology, and infrastructure.7
The amount of copper used in internal combustion engine (ICE) vehicles across electric motors, batteries, and charging infrastructure versus conventional ICE cars.7
Copper supply increase required by 2030 should policy continue to converge on a net-zero emissions path by 2050.8
There is no guarantee that any forecasts made will come to pass.
7 Source: S&P Global, ‘The Future of Copper - Will the looming supply gap short-circuit the energy transition?’ as at 31/07/2022.
8 Source: JP Morgan, as at 30/03/2023.
The iShares Copper Miners UCITS ETF [COPM] invests in developed and emerging market companies, primarily engaged in the copper ore mining industry.
Lithium is an important metal in the production of electric vehicles and energy storage. As the transition to a low-carbon economy unfolds, demand is expected to increase, and companies involved may benefit.9
Investors looking to gain exposure to lithium may want to consider ETFs that offer exposure to the entire value chain. This includes exploration, mining, processing, and compound manufacturing.9
9Source: BlackRock Investment Institute (BII), Investment Perspectives: Tracking the low-carbon transition, Page 6, as of July 2023.
By the end of the decade, 95% of lithium demand will stem from batteries, up from just 30% in 2015.10
Lithium demand is expected to grow between 2021 and 2030, driven by three key factors: the growth of electric vehicles or 'EVs’, rising demand for renewable energy, and lithium’s use in consumer electronics.10
Automotive lithium-ion battery demand increased in 2022, primarily due to growth in passenger EV sales.11
There is no guarantee that any forecasts made will come to pass.
10 Source: McKinsey & Company. Lithium Mining: How New Production Technologies Could Fuel the Global EV Revolution, as at 04/12/2022.
11 Source: Global EV Outlook 2023 – Analysis – IEA, as of 18/12/2023.
The iShares Lithium & Battery Producers ETF [LITM] provides exposure to companies with high exposure to the lithium industry through lithium miners, compounds manufacturers and lithium battery producers.
The shift towards electric vehicles (EV) is underway and so are improvements in advanced driver-assistance systems (ADAS). These trends are underpinned by a confluence of different factors which include the need to reduce carbon emissions, falling cost of batteries, and advancements in information processing capabilities.12
12Source: BlackRock Investment Institute (BII), Investment Perspectives: Tracking the low-carbon transition, Page 5, as of July 2023.
More electric vehicles (EVs) were sold in 2022 compared to 2019 reaching a record 10.5 million. EVs could represent 44% of global car sales in 2030, up from 14% in 2022.13
Is the observed cost reduction for lithium-ion batteries between 2013 and 2022 in real terms. While parity with internal combustion engine vehicles varies by region, parity could occur as early as 2025 for EVs in Europe (at $124/kWh).13
Between US$300 billion and US$400 billion revenue could be generated from autonomous driving by 2035.14
There is no guarantee that any forecasts made will come to pass.
13 Source: BloombergNEF, Electric Vehicle, as at 17/10/2023.
14 Source: McKinsey, as at 31/01/2023.
By screening for supplier connectivity, the iShares Electric Vehicles and Driving Technology UCITS ETF [ECAR] invests in companies across the value chain. This ranges from automakers and their suppliers, semiconductor manufacturers to battery makers.
Portfolio Managers’ current process, which is subject to change without notice.
Risk: The benchmark index only excludes companies engaging in certain activities inconsistent with ESG criteria if such activities exceed the thresholds determined by the index provider. Investors should therefore make a personal ethical assessment of the benchmark index’s ESG screening prior to investing in the Fund. Such ESG screening may adversely affect the value of the Fund’s investments compared to a fund without such screening.
The adoption of renewable energy systems can play a pivotal role in reducing carbon emissions. It can also aid tackling energy security, offering lower-carbon emitting solutions and a path forward for energy needs.15
The production costs of renewable energy now compete favourably with traditional power sources, hastening adoption of these energy alternatives.
15Source: BlackRock Investment Institute (BII), Investment Perspectives: Tracking the low-carbon transition, Page 6, as of July 2023.
Allocated by governments for clean energy investment support since 2020.16
Of all the newly commissioned renewable capacity in 2022 had lower costs than fossil fuel-fired electricity.17
Of new power capacity expansion in 2022 came from renewable sources reaching a record high, from 57% in 2018.17
16 Source: IEA, Government Spending Tracker, as at 30/06/2023.
17 Source: IRENA, Renewable Power Generation Costs in 2022, as at 30/08/2023.
The iShares Global Clean Energy UCITS ETF [INRG] tracks the S&P Global Clean Energy Index. This tracks companies involved in clean energy production and clean energy equipment and technology companies such as solar and wind.