Child Healthcare

More than investing

For decades, the objectives of investors have revolved around personal retirement: accumulate wealth, and then generate income from that wealth. As a result, financial returns are accepted as the default performance metric—but what if investing could also address the world's social and environmental problems?

Key points

01

Invest for more

Investors can support positive social and environmental change by investing in businesses that could help tackle global challenges.

02

Measuring additionality

BlackRock identifies three pillars of additionality that help investors measure the impact that their portfolio may create.

03

Building a better world

Investing in companies that aim to help contribute to a better world by tackling global challenges has potential to combine financial return with real impact.

Invest for more

Impact investing is a sustainable investing approach that combines the intention to generate positive financial returns with positive, measurable social and environmental outcomes.

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.

What does positive impact look like?

The BlackRock Impact Team invests in public companies that they believe can address the world’s greatest problems. Here’s how these companies contributed to a better world in 2020.

102,000 GWh
of renewable energy generated
11 million metric tons
of food waste mitigated
600,000 families
Provided affordable housing
99 million people
Provided access to clean drinking water
1.8 billion patients
Provided affordable healthcare
114 million individuals
empowered with access to financial services

Source: BlackRock Global Impact Annual Report, April 2021

BlackRock’s approach to measuring impact

Impact investing is often associated with the UN Sustainable Development Goals (SDGs), a framework for ending poverty and protecting the planet. A company may appear to be aligned with these goals, but how do investors know if it’s actually making a difference?

Quotation start

Alignment to the SDGs is not enough to qualify as impact; we require that companies advance the SDGs by providing a solution that is additional, thereby creating genuine impact.

Quotation end
Quyen Tran Director of Impact Investing

The three pillars of additionality

Additionality in this context means that the outcome would not have occurred without the company's contribution; thereby creating impact.

1. Additionality from the investee

A company provides additionality if its products and services address a need that is unlikely to be fulfilled by others. The primary sources of company additionality are the:

Map of unbanked individuals globally

Source: The Global Findex Database, World Bank, 2018

Application of leading technologies

  

Deployment of innovative business models

  

Delivery of a company’s products & services to underserved populations

Those that face barriers in accessing services and resources

2. Additionality from the investor
Investors can empower businesses to create positive impact through five mechanisms.
Access, growth, performance, quality, seek

3. Additionality from the asset class

Difference between private markets impact investing, private markets and public equities

All amounts in USD
Source: Private markets come of age, McKinsey & Co, 2019. FactSet,
BlackRock, January 2020

Even with the help of private investments, the world faces a multi-trillion-dollar shortfall in its quest to meet the UN SDGs by 2030. Public equities, with a market value ~20 times larger than private markets, have the ability to shrink this gap by moving capital towards enterprises solving the world’s greatest challenges.

Quotation start

If your savings can earn a strong return invested in companies that are doing good for the world, why would you invest any other way?

Quotation end
Eric Rice Portfolio Manager & Head of Active Equities Impact Investing

Building a better world

In many cases, the greatest challenges can create opportunities for innovation. Here's a closer look at some challenges facing both people and planet, and the innovative solutions which aim to tackle them.

Pollution & waste

The extraordinary amount of waste produced by humans is endangering the environment and the ecosystem in which we live.

Projected waste generation by region

Source: What a Waste 2.0, World Bank, 2018

Innovative solutions

Recycling and waster

There is ongoing innovation in recycling, plastic-free alternatives, and waste management. For example, there is a company that is developing reverse vending machines. Consumers can deposit recyclables at these machines and receive their initial deposit back.

 

If executed well, we believe this service has the potential to create a lasting incentive to recycle.

Public health

While ongoing medical discoveries are important, improving health on a global scale relies on basic access to affordable care.

Number of people spending more than 10% of income on health services

Source: The Sustainable Development Goals Report, UN, 2020

Innovative solutions

Cost Fees
Modernizing the doctor’s office
Investing in technology companies whose services lower administrative costs and increase productivity.
connectivity
Leveraging existing technology
Recognizing the potential of telemedicine, which enables medical visits to be virtual. These services may be a long-term solution for underserved populations.
Density of physicians around the world

Source: Global Health Workforce Statistics Database, World Health Organization, 2021

Safety & security

As individuals, businesses, and governments increase their digital presence, the risk of cybercrime increases.

Estimated average cost of cybercrime

All amounts in USD
Source: The Hidden Costs of Cybercrime, McAfee, 2020

Innovative solutions
Small and mid-sized enterprises (SME) represent 90% of businesses, but are often responsible for their own cybersecurity with limited resources.

Cybersecurity companies that specialize in servicing SMEs, from prevention and monitoring to recovery plans, can help protect this important part of the economy.
Database protection

Why now?

anticipated increase in sustainable investments

Based on the responses of 425 clients around the world representing $25 trillion in AUM.
Source: BlackRock Global Investing Survey, Blackrock, 2020

Impact investing is not limited to the themes above. Around the world, social and environmental issues are capturing the attention of governments and society.

Ultimately, what’s needed are innovative solutions.

By directing capital to the right companies, we believe there is a potential to generate financial return while building a better world.

Why BlackRock?

At BlackRock, positive impact and sustainability is a firmwide commitment.
9x
9 consecutive years’ perfect scores awarded by the Human Rights Campaign’s Corporate Equality Index from 2012–20201
A+
Rated A+ for Strategy and Governance in the Principles for Responsible Investment “PRI” Assessment Report in 20202
100%
100% of travel-related emissions offset since 2017, and 100% renewable energy achieved across global operations in 20203
30+
BlackRock Sustainable Investing experts
260
Active Equity investment professionals
58-member
BlackRock Investment Stewardship team

Source: Human Rights Campaign Foundation 2021, PRI 2021, BlackRock 2021. Personnel Data as of March 2020
1Corporate Equality Index, Human Rights Campaign, 2021.
2The PRI Reporting Framework is a key step in building an industry standard for reporting responsible investment (RI) activities. The module scale of evaluation goes from E (worst) to A+ (best).
3BlackRock’s support for this initiative is made via grants recommended to and paid by the BlackRock Charitable Trust, a donor-advised fund. In June 2020, we achieved our 100% renewable energy goal to match with renewable electricity the same amount of electricity our global operations (including data centers) consume annually. This is done through procuring renewable energy directly where possible and through purchasing environmental attribute credits where we do not have operational control or renewable energy is not available.

Risk Warnings

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.

Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.

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