A new report from the world’s biggest asset management firm predicted that environment, social and governance (ESG) performance will be a key driver of gains and losses in investments. As investors shift money into sustainable funds, companies that perform well on ESG metrics will see their value rise, while those that perform poorly will fall in value, according to the report. (Financial Times)
Talking point: It’s been a month since BlackRock committed to significantly increasing its ESG exposure and scrubbing its actively managed portfolios of clients that earn more than a quarter of their revenues from thermal coal. This new report emphasizes the financial significance of that decision, not just the ethical one. Historically, ESG investments have been viewed as nice-to-haves at best and detrimental to bottom lines at worst; BlackRock is saying the opposite is true—that sustainable investments are essential and add value. U.S. Senator Elizabeth Warren is holding the firm to its commitment on sustainable investing: this week, the presidential candidate pressed BlackRock CEO Larry Fink to detail how he plans to make ESG “the new standard for investing” and urged him to support her Climate Risk Disclosure Act, which requires firms to disclose their climate-related financial risk.