Sustainable and transition investing

TEXT: The world is transitioning to a low-carbon economy. 

TEXT: Technological innovation is spreading

Carolyn Weinberg: Wow, so this is the nerve center?

Dickon Pinner: Each one of those is one of these automated trucks?

Alvin Foo: Automated guided vehicles.

TEXT: Climate and transition policy initiatives are driving transformation. 

Chris Kaminker: Recent shifts in U.S. policy have sparked a global clean energy race that is creating investment opportunities on both sides of the Atlantic.

TEXT: Companies are transforming and supply chains are evolving

Martin Lundstedt: This is the beauty.

Mark Wiedman: Fully electric!

Martin Lundstedt: Fully electric. 

Mark Wiedman: I am driving a proper truck.

Martin Lundstedt: Yeah, yeah, absolutely.

TEXT: The shape of the global economy is changing. 

TEXT: And new investment risks and opportunities are emerging. 

Anne Valentine Andrews: The low-carbon transition is a once-in-a-lifetime opportunity for our clients and BlackRock has the breadth, expertise and whole portfolio solutions to meet our clients needs.

CONCLUSION 

VO: The transition to a lower-carbon world is happening.

VO: And at BlackRock… 

VO: We’re ready. 

Clients are increasingly asking BlackRock how to mitigate risks to their portfolios, and capture investment opportunities associated with sustainability and the transition to a low-carbon economy. As a fiduciary, we invest on our clients’ behalf to help them meet their investment objectives.

BlackRock’s approach to sustainable investing and the transition to a low-carbon economy is rooted in our fiduciary duty to clients. We start by understanding our clients’ investment objectives and provide choice to meet their needs; we seek the best risk-adjusted returns within the scope of mandates they give us; and we underpin our work with research, data, and analytics.

sustainable investing

What is sustainable investing?

Sustainable investing refers to strategies which leverage environmental, social and/or governance (ESG) objectives, themes, and related considerations as a primary means for selecting investments.

Sustainable investing products

The four categories of the BlackRock sustainable investing platform—Screened, Uplift, Thematic and Impact—adopt different strategies to help investors to meet their investment objectives.

Screened Uplift Thematic Impact
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To explore the sustainability characteristics of specific funds, visit the product pages of BlackRock.com and iShares.com.

Transition investing

What is transition investing?

The transition to a low-carbon economy is among a handful of major structural shifts having the potential to rewire economies, sectors and businesses.

Today, not all sustainable strategies are transition, and not all transition strategies are sustainable. By understanding the relationship between these types of investing strategies, investors can identify the products and solutions that meet their objectives.

BlackRock defines transition investing as investing with a focus on preparing for, being aligned to, benefitting from and/or contributing to the transition to a low-carbon economy.

Transition investing graphic

Source: BlackRock, September 2023. For illustrative purposes only. This graphic represents the relationship between sustainable investing and transition investing based on current AUM and may not be drawn to scale. For more information, please refer to our Firmwide ESG Integration Statement.

How is the transition creating investment opportunities?

Structural shifts associated with the low-carbon transition – technological innovation, consumer and investor preferences for lower-carbon products, and shifts in government policies – are reshaping production and consumption and spurring capital investment.

Three forces are driving this economic transformation: 1

Transition investing graphic

This is creating investment opportunities. For example, average annual spend in the energy system through 2050 is estimated to reach US$4 trillion per year, up from US$2.2 trillion over the last decade. 2,3

Transition investing products

Transition in action

BlackRock partners with companies that are developing innovative solutions that could transform their industries.

Energy transition partnerships in action

Valerie: Renewable power has seen significant growth in the past decade. Join us, as we speak to companies that are driving the transition to provide access to renewable energy in Asia.

Cristobal: Chow energy is a leader in the commercial and industrial solar space in Thailand. And our unique proposition is that we are able to offer customers the ability to reduce their carbon emissions, as well as save on their electricity bills, all for a zero upfront investment.

Aboy: Empowering the future. That is our mission here at CleanTech. And we aim to be able to improve the lives of our countrymen, the communities that we are present in.

Chee Aun: Headquartered out of Malaysia, we started our business 15 years ago as a solar. We build utility scale power plants as well as selling clean electricity to key sectors such as data centers, hospitals, airports.

Valerie: Do you see that there is enough capital, or do you think there is not enough competitive capital in the region?

Chee Aun: Many reports we are seeing, we need, US$1.5 trillion in Southeast Asia by 2030 for the energy transition to happen. (Source: S&P Global, as of 15 April 2024)

Cristobal: Key is on the ground making sure that the projects are creditworthy. That enables investors and also debt capital to come in and be assured that there is a longevity in that contract.

Aboy: Our partnership has actually given us that access to cost-effective capital. And that certainly helps with the speed and scale theme that we want to deploy our renewables with.

Valerie: Many countries have pledged net zero and now everybody’s wondering how do we get there. In your opinion, what are the major topics that need to be addressed to even accelerate renewable power growth?

Cristobal: Oftentimes we see these grand targets that we need to achieve in 10, 15, 20 years’ time. But I think sometimes where we lack is, that regulatory support in the here and now. If we can foster more public-private partnerships, leveraging on the expertise and the capital from the private sector, and marry that with the policy objectives of the public sector, I think we will see a lot more fund flow and a virtuous cycle where positive case studies will lead to further implementation and further successful projects.

Video Playlist

Energy transition partnerships in action

Valerie: Renewable power has seen significant growth in the past decade. Join us, as we speak to companies that are driving the transition to provide access to renewable energy in Asia.

Cristobal: Chow energy is a leader in the commercial and industrial solar space in Thailand. And our unique proposition is that we are able to offer customers the ability to reduce their carbon emissions, as well as save on their electricity bills, all for a zero upfront investment.

Aboy: Empowering the future. That is our mission here at CleanTech. And we aim to be able to improve the lives of our countrymen, the communities that we are present in.

Chee Aun: Headquartered out of Malaysia, we started our business 15 years ago as a solar. We build utility scale power plants as well as selling clean electricity to key sectors such as data centers, hospitals, airports.

Valerie: Do you see that there is enough capital, or do you think there is not enough competitive capital in the region?

Chee Aun: Many reports we are seeing, we need, US$1.5 trillion in Southeast Asia by 2030 for the energy transition to happen. (Source: S&P Global, as of 15 April 2024)

Cristobal: Key is on the ground making sure that the projects are creditworthy. That enables investors and also debt capital to come in and be assured that there is a longevity in that contract.

Aboy: Our partnership has actually given us that access to cost-effective capital. And that certainly helps with the speed and scale theme that we want to deploy our renewables with.

Valerie: Many countries have pledged net zero and now everybody’s wondering how do we get there. In your opinion, what are the major topics that need to be addressed to even accelerate renewable power growth?

Cristobal: Oftentimes we see these grand targets that we need to achieve in 10, 15, 20 years’ time. But I think sometimes where we lack is, that regulatory support in the here and now. If we can foster more public-private partnerships, leveraging on the expertise and the capital from the private sector, and marry that with the policy objectives of the public sector, I think we will see a lot more fund flow and a virtuous cycle where positive case studies will lead to further implementation and further successful projects.

What makes BlackRock a partner of choice?

Clients need a sustainability and transition partner who can bring together global offerings, specialized expertise, and investor-centric analytics under one platform.
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Whole portfolio

We help our clients execute whole-portfolio transformations, from x-raying the portfolio, to developing a strategy, to monitoring progress.
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Product choice

Our scale enables choice and benefits clients, providing a choice of products across asset classes and themes.
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Stewardship

We act as a steward of our clients’ assets for the long-term.
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Innovation

We innovate for and with our clients, developing new products and unlocking new opportunities.

Research

We have been at the forefront of helping investors understand the impact of climate and sustainability risk on portfolios. Our team of in-house specialists, including sector specialists and climate scientists, are uncovering insights to power investments.

ESG integration

What is ESG integration?

BlackRock defines ESG integration to be the practice of incorporating financially material environmental, social and governance (ESG) data or information into our firmwide processes with the objective of enhancing risk-adjusted returns of our clients’ portfolios. This applies regardless of whether a fund or strategy has a sustainable or ESG-specific objective.

ESG refers to specific considerations that can be used as part of investment decision-making. Examples of ESG information could include:

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Environmental (E)

Carbon emissions, Waste, Water stress
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Social (S)

Diversity, Health and safety, Privacy and data security
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Governance (G)

Board structure / size , Executive remuneration, Ownership structure

BlackRock has a framework for ESG integration that permits a diversity of approaches across different investment teams, strategies and particular client mandates.

For more detail, refer to BlackRock’s ESG Integration Statement.