The world of impact investing just got a lot more interesting as Blackrock, the largest money manager in the world with nearly $7 trillion under management, committed to the space in a big way. The company’s chairman Larry Fink said last week that he believes “we are on the edge of a fundamental reshaping of finance” due to climate-change-related issues and committed the firm to making sustainability the new standard in its investment offerings. This includes integrating sustainability across the firm: into its technology platform, risk management, data transparency, and various product choices.
We recently wrote about how the financial industry is responding to climate change both out of self-preservation and due to regulatory pressures. In his letter to clients about the changes, Fink echoes many of the same themes that the IMF recently discussed in its biannual Financial Stability Report from October, indicating the firm is paying close attention to the corporate performance and systemic issues facing financial firms in the immediate future. Blackrock’s move was bold, but we do believe this is the direction finance is moving. Regulators’ concerns that these types of changes could lead to a sudden and large-scale shift toward “greener” assets may be happening much sooner than expected.