The world's biggest asset manager BlackRock (BLK.N) said it will increase the products and services it offers to help investors "navigate, drive and invent" the transition to a net-zero world, in a letter to clients on Wednesday.
Decarbonisation has become a matter of when, not if, with countries accounting for 95% of global emissions committed to reaching net-zero emissions in the coming decades, BlackRock said.
The speed of transition, however, is uncertain, with the rate of recovery from the pandemic impact leading to a revived focus on fossil fuels as their prices surge and energy supplies run short. Vice-Chairman Philipp Hildebrand, who was among the executives who signed the letter dated Feb. 3, said markets were beginning to price in the effects of the climate transition on asset prices, which he said was "creating a significant opportunity for our clients".
To help investors, BlackRock said it would create the BlackRock Transition Scenario to show how it expects the shift from a fossil fuel economy to impact technologies, sectors and regions.
Already trillions of dollars have moved into funds and products focused on environmental, social and governance-related (ESG) investment.
In 2021, 70% of a selection of broad-market ESG indices outperformed their non-ESG counterparts, with an average outperformance of over 100 basis points, BlackRock said.
It plans to launch more active and passively managed products to help clients access "climate-aware" strategies and will expand its iShares strategies to include climate benchmarks, as well as incorporate climate analytics into its consulting services.
For those keen to do more, it will create new funds and strategies to drive the transition, for example by funding green energy technologies that have yet to reach scale, such as sustainable aviation fuel.
In conclusion, the letter said BlackRock was helping clients to "navigate, drive, and invent this economic and financial transformation".
Fossil-Free Finance Campaign Manager with the Sierra Club Ben Cushing said BlackRock deserved credit for its leadership but more "hard choices" were required to prevent investment in polluting companies.
"The accelerating climate crisis means that the gap between the current progress and the action that’s needed is ever-growing," he said.