Amelia Tan, Director, EMEA Head of Platform Strategy & Innovation, BlackRock Sustainable Investing
Please give us some background information on yourself and how your organisation plays a leading role in the climate risk agenda?
I am the EMEA Head of Platform Strategy and Innovation for the Sustainable Investing team at BlackRock.
As a fiduciary to our clients, BlackRock is focused on protecting and growing the value of our clients’ assets. We take an integrated approach to sustainability across a few key pillars:
Investment Insights and Processes – Developing the clearest picture of sustainability-related insights and data and integrating those insights into BlackRock’s investment process. For example, we work to incorporate climate risk into our investment analyses across equity, fixed income, multi-asset and alternatives.
Investment solutions – We manage a broad suite of investment solutions - from green bonds and renewable infrastructure to thematic strategies and low-carbon ETFs - to empower clients to achieve their sustainability and financial goals. As of December 2018, BlackRock manages approximately $50 billion in dedicated sustainable investing strategies across ESG, thematic and impact investments, as well as an additional $440 billion in screened investment solutions.
Investment Stewardship – As shareholders on behalf our clients, we engage with companies on sustainability-related issues that impact long-term performance. Disclosure of material climate-related information by public issuers is one of BlackRock’s investment stewardship team’s key priorities for engagement, as we believe that companies with sound corporate governance practices, including how they manage the environmental and social aspects of their operations, better mitigate risk over the long term, and offer better risk-adjusted returns. As an original member of the 32-member Task Force on Climate Related Financial Disclosure (TCFD), BlackRock also supports industry-wide efforts to improve climate-related financial disclosure by public issuers.
Business operations – We are committed to running our firm in a sustainable manner and are deliberate in using our resources responsibly. We seek alternative approaches that can reduce or offset the environmental impact of our corporate offices by advocating energy and waste management best practices and driving operating efficiencies. As a result of our ongoing efforts, BlackRock was recognized by the Carbon Disclosure Project (CDP) in 2018 with an A- score.
What’s the one thought you would like attendees to take away with them from the Climate Risk Summit?
We believe that there are two primary sources of climate-related investment risk, the impact of which we are looking to better articulate and use as the basis for new investment strategies:
Physical Risk – this captures the impacts of environmental change on financial performance. To address the current lack of thorough company-level insights on topics such as preparedness and risk exposure, we are working with climate scientists to identify and map future trends in risks relating to rising temperatures and sea levels, and well as floods and droughts, so that we can better predict impacts on a given company’s physical property, plant and equipment, and identify exposure of our client’s assets to unpriced climate change risks.
Transition Risk - this captures the risks (and potential opportunities) arising from regulatory and technological changes associated with the transition to a low carbon economy. The transition to a low-carbon economy will create winners and losers and will ultimately impact long-term investment performance. We have developed a proprietary Transition Readiness Signal to demonstrate how well-positioned a company is to operate within a low carbon economy, and thus empower investors to make better informed decision about the weighting of specific exposures.
What are the biggest risks facing businesses when it comes to facing/dealing with climate change?
Historically, available data has not provided a thorough view of the material impact of climate risks on financial performance. This is an area we are addressing head on, with initiatives like the mapping work underway with climate scientists and the development of a Transition Readiness Signal. These crucial advances in data and analytics are transforming sustainable investing from the niche practice it once was into something that any smart investor must take into account.