By Caroline Grady 17-01-2020

Sustainability. Our New Standard (The Bid, BlackRock)

(20 min listen)
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Summary (You can listen to the podcast by clicking here)

Blackrock’s Head of Multi-Asset Strategies, Rich Kushel, sets out the firms sustainability approach:

• Climate risk is investment risk. It will impact more than the environment and is causing both physical risks and a large-scale reallocation of capital towards sustainability-focused investments.

• The impact on valuations is profound and BlackRock has started to exit investments that pose ESG risks, such as thermal coal businesses

• Although long-term trends are clear, there is still a significant chunk of investors who still haven’t converted to low carbon investment allocations, leaving themselves exposed to mispriced risks

• Blackrock is setting up new  ESG investments, including a sustainability-based passive index.

• They also require firms that they invest in to adopt the standards set by the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosure (TCFD)

 

Why does this matter? The sustainability movement is about investments that are not solely intended for increasing profits, at least in the short term. That’s why it marks a major shift in firms’ behaviour. According to Rich Kushel, in 10 years from now the word “investment” will not even need sustainable next to it, it will be implied by default.

 

 


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