Something of significance is afoot in the investment world. Sustainability investing, which includes an evaluation of a company’s environmental and climate change impact, is going mainstream. There has been a paradigm shift from viewing sustainability as a personal or policy value to viewing it as an important consideration in assessing investment risk. Putting it in the positive, companies with strong sustainability policies will be better positioned to thrive in the future, as environmental and climate change considerations become increasingly important. Exhibit #1 is the recent announcement by BlackRock, the largest global asset manager, on a fundamental shift in its investment policies toward sustainability (see below).
- BlackRock Getting Greener? Larry Fink, BlackRock’s C.E.O., recently announced that BlackRock would begin unwinding investments in companies that posed significant sustainability risks and would introduce new funds that avoid fossil fuels. In Fink’s own words, “The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.” How all this plays out for BlackRock and whether it will make a significant difference will be closely watched, but it is unquestionably a watershed time in the financial world. (New York Times) (CNBC) (Wall Street Journal)