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Sustainable investing – get ahead of client demand
According to Morningstar, 72% of U.S. investors have expressed interest in sustainable investing.1 Introduce it to your clients before somebody else does.
The new standard for investing
Just as every day activities have improved thanks to data and technology (i.e. driving a car), so has investing. Explore how sustainable investing can help give a more complete view of the companies you invest in.
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Let’s flashback to driving a car 15 years ago. Drivers would use rear and side view mirrors to merge, back up, and park. Today, thanks to advancements in technology, we have cars with rear view cameras, collision warnings, and side view sensors. These evolved safety features give drivers a more complete view of their surroundings, helping them make better decisions.
The same thing is happening with investing. While traditional financial analysis still anchors investment decisions, the greater availability of sustainable data today gives investors a more holistic view of the companies they invest in.
Sustainable investing uncovers Environmental, Social, and Governance (or ESG)-related risks and opportunities that traditional security analysis may overlook. By giving investors a more complete view, sustainable investing helps identify companies that may be better positioned for long-term growth. Let’s zoom in.
Environmental Risks increasingly threaten company profitability through extreme weather, rising sea levels or pollution and waste. Companies exposed to frequent extreme weather events, near the water, or in a wildfire zone, may face disruptions to their operations and threaten their long-term performance.
Product liability, health and safety, and data privacy are all examples of Social risks to a company. Companies that overlook data security risks may be susceptible to hackers or data breaches that can quickly drive down a stock price.
Board quality and diversity, fair CEO pay, and accounting practices are all Governance risks. Companies with a diverse and independent board of directors can help reduce the risk of oversight, fraud, and bribery.
Sustainable investing doesn’t replace traditional financial analysis – it supplements and enhances it. BlackRock empowers investors to assess ESG risks in their portfolio construction process and makes it easy to get started with solutions across both iShares ETFs and BlackRock active mutual funds.
Regardless of your views on the future, long-term success is one goal that unifies all investors. BlackRock believes that investments that consider E, S and G metrics can help you pursue long-term success of not just your portfolio, but the world.
The shift to sustainable investing
Advisors are taking a second look at sustainable investing for three reasons: clients are asking for it, competitive performance, and it’s easy to do.
Investing sustainably has not come at the cost of performance
By uncovering additional risks and opportunities in a company, ESG can potentially provide better outcomes for investors over the long term.
*Morningstar, as of 12/31/2020. Annualized NAV returns shown. Correlation time period is since ESGU's inception, using daily returns. The MSCI USA Index is the parent index of the index that ESGU seeks to track. The S&P 500 index is a commonly followed, broad market index. There may be material differences between the fund's index and the index shown including without limitation index provider, holdings, methodology and performance.
Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Performance data represents past performance and does not guarantee future results. Investment return and principal value will fluctuate with market conditions and may be lower or higher when you sell your shares. Current performance may differ from the performance shown. Click on the fund name below for most recent month-end performance, standardized performance, and the fund's index performance.
Climate change changes investing
Jean Bovin, Head of the BlackRock investment institute, explores why we believe the climate transition will boost portfolios.
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1 Source: Morningstar. Are Your Clients ESG Investors? April 22, 2019. Based on a nationally representative sample of 948 respondents.
Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses which may be obtained visiting the iShares ETF and BlackRock Mutual Fund prospectus pages. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal.
This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.
Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the fund. Any applicable brokerage commissions will reduce returns. Beginning August 10, 2020, market price returns for BlackRock and iShares ETFs are calculated using the closing price and account for distributions from the fund. Prior to August 10, 2020, market price returns for BlackRock and iShares ETFs were calculated using the midpoint price and accounted for distributions from the fund. The midpoint is the average of the bid/ask prices at 4:00 PM ET (when NAV is normally determined for most ETFs). The returns shown do not represent the returns you would receive if you traded shares at other times.
The funds’ environmental, social and governance (“ESG”) investment strategies limit the types and number of investment opportunities available to the funds and, as a result, the funds may underperform other funds that do not have an ESG focus. The funds’ ESG investment strategies may result in the funds investing in securities or industry sectors that underperform the market as a whole or underperform other funds screened for ESG standards. In addition, the Index Provider may be unsuccessful in creating an index composed of companies that address a major social or environmental challenge.
The Funds are distributed by BlackRock Investments, LLC (together with its affiliates, "BlackRock").
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Barclays, Bloomberg Finance L.P., BlackRock Index Services, LLC, Cohen & Steers Capital Management, Inc., European Public Real Estate Association (“EPRA® ”), FTSE International Limited (“FTSE”), ICE Data Services, LLC, India Index Services & Products Limited, JPMorgan Chase & Co., Japan Exchange Group, MSCI Inc., Markit Indices Limited, Morningstar, Inc., The NASDAQ OMX Group, Inc., National Association of Real Estate Investment Trusts (“NAREIT”), New York Stock Exchange, Inc., Russell or S&P Dow Jones Indices LLC. None of these companies make any representation regarding the advisability of investing in the Funds. With the exception of BlackRock Index Services, LLC, who is an affiliate, BlackRock Investments, LLC is not affiliated with the companies listed above.
Neither FTSE nor NAREIT makes any warranty regarding the FTSE NAREIT Equity REITS Index, FTSE NAREIT All Residential Capped Index or FTSE NAREIT All Mortgage Capped Index; all rights vest in NAREIT. Neither FTSE nor NAREIT makes any warranty regarding the FTSE EPRA/NAREIT Developed Real Estate ex-U.S. Index, or FTSE EPRA/NAREIT Global REIT Index; all rights vest in FTSE, NAREIT and EPRA.“FTSE®” is a trademark of London Stock Exchange Group companies and is used by FTSE under license.
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