Last week, Larry Fink, head of BlackRock, the world's largest investor with $7T of assets under management, sent a message to corporate leaders that he sees climate change and sustainability as major new filters for how his firm will invest dollars.
Here are some key excerpts:
"Climate change has become a defining factor in companies’ long-term prospects."
"The evidence on climate risk is compelling investors to reassess core assumptions about modern finance."
"Indeed, climate change is almost invariably the top issue that clients around the world raise with BlackRock."
"In the near future – and sooner than most anticipate – there will be a significant reallocation of capital."
"As a fiduciary, our responsibility is to help clients navigate this transition. Our investment conviction is that sustainability- and climate-integrated portfolios can provide better risk-adjusted returns to investors. And with the impact of sustainability on investment returns increasing, we believe that sustainable investing is the strongest foundation for client portfolios going forward."
Will this all happen tomorrow? Of course, not.
Wholesale change takes time.
But it feels like we're at the beginning of an S-curve for widespread adoption of ESG (Environment, Social, Governance), impact investing, sustainability-minded, and climate change-aware investment strategies.