Sustainable Investing

Transcription

1 Sustainable Investing Putting your money to work for purpose and performance Coen Brouwer, Director, BlackRock 23 May, 2017 FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY

2 Global growth in sustainable investing driven by a range of factors Organizations Facing Client Pressure Risks Posed by Global Challenges Country Imposed Regulations Asset Owners with Social Missions Transfer of Wealth Netherlands Promoting sustainable frameworks France Evaluating financial materiality of climate risk 991B 94% of pensions 3,121B Article 173 size of sustainable investing market in the Netherlands 1 in the Netherlands apply at least some ESG criteria in evaluation of equity investments 1 size of sustainable investing market in France 1 asset owners and asset managers are now required to disclose information on the management of climate related risks 1 1. European SIF; December FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY 2

3 BlackRock s Commitment to Sustainability Over the long-term, environmental, social and governance (ESG) issues ranging from climate change to diversity to board effectiveness have real and quantifiable financial impacts. Larry Fink s 2016 Corporate Governance Letter to CEOs Source: Source: FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY 3

4 BlackRock s commitment to sustainable outcomes and long-term value BlackRock Impact ESG Integration Investment Stewardship Sustainable Investment Solutions Traditional Investment Analysis Corporate Engagement and Voting BlackRock Corporate Responsibility FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY 4

5 Moving from idea to implementation Identify risks and opportunities Know what you own Take Action FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY 5

6 Aladdin as the Engine Behind Our ESG Capabilities BlackRock is committed to empowering clients who wish to consider or target environmental, social and governance goals in addition to their financial risk and return goals. We have, therefore, actively built a competitive platform of products and capabilities across asset classes and continue to work with our clients to ensure their needs are efficiently met. Aladdin as the platform for integration Aladdin is the operating system that powers Collective Intelligence and connects the data, people and technology to manage money in real time. It is the Engine behind BlackRock s ESG Analytics and Reporting Capabilities. Relied on by approximately 20,000 investment professionals around the world Powered by more than 1,000 developers Covers the full investment process across asset classes Implemented in partnership with each client Delivered as a hosted service, including the Aladdin technical infrastructure and system administration Source: BlackRock, September FOR PROFESSIONAL CLIENTS AND QUALIFIED INVESTORS ONLY 6

7 Aladdinizing ESG Data Company Data Companies report on hundreds of ESG metrics ranging from CO2 emissions or board independence to maternity leave Data Provider Data providers interpret and aggregate the components for each company to come up with headline ESG metrics MSCI, Sustainalytics and Bloomberg are three example current players BlackRock uses MSCI ESG Manager* Aladdin Issuer Data BlackRock receives issuer level ESG metrics from provider on 8,500 companies and 198 countries BlackRock maps each issuer metrics to more than 350,000 individual securities* All securities issued by a company will have the same ESG metrics as the issuer i.e., an issuer s equity and fixed income securities will have the same ESG metrics Aladdin Portfolio Data Use Aladdin to aggregate security information at sector, portfolio, and benchmark level 4,400 portfolios analysed every day, representing $4,3 trillion assets managed by BlackRock* Actively working to integrate with the broader Aladdin Community * As of 31 December Source: MSCI, BlackRock. FOR PROFESSIONAL CLIENTS AND QUALIFIED INVESTORS ONLY 7

8 Focus on Metrics ESG & Climate Data MSCI uses more than 1,000 data points on ESG policies, programs and performance to focus on 37 sector-based and universal key issues grouped under 10 themes that roll up to environmental, social or governance pillars. All of these are factored into a holistic ESG score.. Environmental Pillar Social Pillar Governance Pillar Climate Change Natural Capital Pollution & Waste Env. Opportunities Human Capital Product Liability Stakeholder Opposition Social Opportunities Corporate Governance Corporate Behavior Carbon Emissions Water Stress Toxic Emissions & Waste Opp. In Clean Tech Labor Management Product Safety & Quality Controversial Sourcing Access to Communication Board Business Ethics Product Carbon Footprint Biodiversity & Land use Packaging Material & Waste Opp. In Green Buildings Health & Safety Chemical Safety Access to Finance Pay Anti- Competitive Practices Financing Environmental Impact Raw Material Sourcing Electronic Waste Opp. In Renewable Energy Human & Capital Development Financial Product Safety Access to Health Care Ownership Corruption & Instability Climate Change Vulnerability Supply Chain Labor Standards Privacy & Data Security Opp. In Nutrition & Health Accounting Financial System Instability Responsible Investment Source: MSCI, April Insuring Health & Dem Risk Pillar Theme Universal Key Issue Other Key Issues FOR PROFESSIONAL CLIENTS AND QUALIFIED INVESTORS ONLY 8

9 Identifying Long-Term Risks and Value Drivers BlackRock has been building the infrastructure to integrate ESG data into Aladdin s suite of portfolio management and risk reporting tools. ESG Integration Portfolio Risk Assessment Carbon Footprinting Consistent Screens Integrate ESG factors into investment process to identify risks and opportunities Provide clients with portfolio level ESG snapshots relative to benchmark Run carbon footprint on portfolios, provide carbon reduction strategies Update available screens across platform Source: BlackRock, MSCI, as of March For illustrative purposes only. FOR PROFESSIONAL CLIENTS AND QUALIFIED INVESTORS ONLY 9

10 Life of ESG Analytics in Aladdin ESG Integration in the Investment Process BlackRock is poised to help get Sustainability into the Mainstream, and in a way where we re talking about financial returns and sustainability at the same time. GreenPackage Daily snapshot of portfolio and position reporting across the book of business Prism Interactive portfolio analysis and charting Aladdin Market Intelligence ESG Surveillance and Screening ESG Aladdin Research ESG Research Commentary on Companies Portfolio Construction ESG Portfolio Modelling including optimization and order generation ATX Incorporation of ESG in Research Templates Source: BlackRock, as of March For illustrative purposes only. FOR PROFESSIONAL CLIENTS AND QUALIFIED INVESTORS ONLY 10

11 Green Package Morning Newspaper The Green Package ESG & Carbon Metrics reports give the ability to start every day with a static snapshot of a portfolio s exposure to Environmental, Social and Governance across products and asset classes, in order to make informed decisions. Two views have been tailored to show: Exposure: True economic exposure to ESG risk Direct Ownership: Direct capital financing to issuers Leveraging Aladdin's bottom-up framework, it is possible to drill down into sector and security-level reports. Additional views can be enabled to view ESG Rating Distribution, and compare ESG distribution to capital allocation. Source: BlackRock, MSCI, as of March For illustrative purposes only. This gives insight into which sectors and securities are adding to or detracting from absolute and active ESG exposure and carbon footprint. FOR PROFESSIONAL CLIENTS AND QUALIFIED INVESTORS ONLY 11

12 Prism Interactive Reporting and Charting to Analyze portfolios How has my active ESG positioning changed through time? Which sectors in my portfolio have high concentrations of poor active ESG performers? What is my portfolio active riskreturn profile from an ESG perspective? Prism brings ESG & Carbon Metrics data to life in a visual and interactive manner. It gives the ability to analyse portfolios positioning, risk and returns from an ESG angle, and run custom analyses to identify risk and opportunities in ESG. Are premium P/E warranted when viewed through an ESG lens? What is my portfolio s ESG rating distribution? What are my top contributors and detractors? Reference to the names of each company mentioned in this communications is merely for explaining the investment strategy, and should not be construed as investment advice or investment recommendation of those companies. Source: BlackRock, MSCI as of March For illustrative purposes only. FOR PROFESSIONAL CLIENTS AND QUALIFIED INVESTORS ONLY 12

13 Portfolio Construction Portfolio Modelling and Trade Generation Portfolio Construction is Aladdin s real-time portfolio modelling tool. In addition to intraday exposure updates, it allows for order generation and what-if analyses from an ESG viewpoint. Understand Real-Time ESG Positioning Monitor ESG Exposure with Pre-Trade and Post-Trade Compliance Compliance rules are coded against ESG investment constraints. In this case, the CCC-rated security is violating the constraint of holding only BBB+ rated securities. Source: BlackRock, MSCI as of March For illustrative purposes only. FOR PROFESSIONAL CLIENTS AND QUALIFIED INVESTORS ONLY 13

14 ESG Know what you own: BlackRock has integrated carbon and ESG metrics into Aladdin Fund Benchmark Active ESG Coverage % Market Value 93.0% 96.5% ESG Adjusted Score 0 (worst) - 10 (best) Environment Score 0 (worst) - 10 (best) Social Pillar Score 0 (worst) - 10 (best) Governance Score 0 (worst) - 10 (best) Sources: For illustrative purposes only. *Underlying stock metrics sourced from MSCI ESG research. FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY 14

15 Carbon Carbon Reporting Fund Benchmark Active Emissions Financed - Latest (metric tonnes / $ million total capital) Emissions Intensity - Latest (metric tonnes / $ million total sales) Sources: For illustrative purposes only. *Underlying stock metrics sourced from MSCI ESG research. FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY 15

16 Three approaches to sustainable investing Exclusionary Screens ESG Factors Impact Targets Divest from companies or industries involved in controversial practices Overweight securities with strong Environmental, Social, and Governance management Target defined and measurable social or environmental outcomes Source: BlackRock. FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY 16

17 Building product suite across asset classes, styles and sustainable approaches $180 billion in sustainable investing across investment styles and vehicles PASSIVE ACTIVE Equity Equity Exclusionary screens broad sustainability, country, sector, or thematic issues Low carbon reduce carbon footprint while maintaining global stock exposure ESG best-in-class select highest ESG-rated companies within investment universe Clean energy solar, wind, and other renewable sources Fixed Income ESG optimized improve ESG without adding significant active risk to traditional index Sustainable impact companies with socially conscious practices that may drive positive change Systematic impact equity combine financial outcome with ESG sensibility ESG screened Exclude companies with ESG scores below a certain value Fixed Income Model based impact bond combine financial outcome with ESG sensibility Clean energy target global equity securities focused on new energy companies Green bonds target measurable positive environmental outcomes Exclusionary screens broad sustainability, country, sector, or thematic issues ESG best-in-class select highest ESG-rated companies within investment universe Green bonds target measurable positive environmental outcomes Alternatives Renewable power private investment in the equity of utility-scale wind and solar projects Source: BlackRock; AUM as of 12/30/16. FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY 17

18 Disclaimer This material is for distribution to Professional Clients (as defined by the FCA or MiFID Rules) and Qualified Investors only and should not be relied upon by any other persons. Issued in the Netherlands by the Amsterdam branch office of BlackRock Investment Management (UK) Limited: Amstelplein 1, 1096 HA Amsterdam, Tel: Registered in England No For your protection telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited. Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: Registered in England No For your protection telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited. Past performance is not a guide to current or future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time. Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, ishares, BUILD ON BLACKROCK, SO WHAT DO I DO WITH MY MONEY and the stylized i logo are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners. FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY 18

19 Together we are able to identify risks and opportunities know what you own take deliberate actions And make a difference coen.brouwer@blackrock.com FOR PROFESSIONAL CLIENTS / QUALIFIED INVESTORS ONLY 19