A sea change in global investing

Integrating climate into portfolios with ETFs

This paper outlines:

  • Four ways climate change will impact asset prices
  • A simple framework to assess different approaches to climate investing
  • Examples of how investors can consider using ETFs as building blocks for their portfolios with an eye toward climate

The idea that climate risk represents investment risk has moved from a novelty in the investment world to something approaching mainstream thinking in just a few years.

While the momentum behind sustainability is remarkable, it is still the beginning of a long journey. An estimated $50 to $100 trillion in capital investment is required to rebuild a “net zero” global economy — one that emits no more greenhouse gas than it removes from the atmosphere by 2050.1

We believe that financial markets are only beginning to appreciate the potential impact of the shift toward sustainability on asset prices. The convenience that ETFs provide can further catalyze a synchronized move toward sustainability that we believe over time will help make the most sustainable assets become more valuable and the least sustainable assets less valuable.2 BlackRock thinks such a tectonic shift will reward first-mover investors and give companies meaningful incentives to accelerate their transition to a low-carbon economy.