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Sustainable investing at BlackRock

Sustainable investing is the practice of analysing a company’s environmental, social and governance (ESG) risks, as well as assessing its opportunities and progress, using ESG data and fundamental insights, to inform the allocation of capital.

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.

What is sustainable investing?

BlackRock believes that investments that consider sustainable 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.

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 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: transition finance and stakeholder capitalism.

Transition investing

The transition to a low-carbon economy 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. As a fiduciary, we are committed to helping our clients manage the risks and capture the opportunities associated with the transition by offering a holistic platform of investment solutions and data & analytics.

Stakeholder capitalism

It is clear that putting your company’s purpose at the heart of your relationships with your stakeholders is critical to long-term success. We help clients meet their social and financial objectives by linking sustainability with financial returns.

How to navigate the sustainable transition
Investors already know why they should invest sustainably, that’s the easy part. So at BlackRock, we’re focused on how. We understand the path to transition is still uncertain and investors have many questions. BlackRock is committed to being your navigator for the how in your sustainable transition.
How

Explore our sustainable fund range

At BlackRock, sustainable investing spans a range of strategies that combine traditional investment approaches with sustainability insights to seek to deliver both financial and sustainable objectives.

Risk: The environmental, social 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.

Investment Stewardship at BlackRock
Find out how we advocate for sound corporate governance and sustainable business practices.
Pathway

Climate Investing Terms

  • 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.

  • 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.

  • 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.

  • International agreement to keep the increase in global average temperature to well below 2°C above pre-industrial levels while endeavouring 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.

  • 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.

  • 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.