The heart of BlackRock’s business model is helping clients invest for the long-term, through strategies ranging from retirement target date funds to growth equity and infrastructure. As we look ahead, the most capital-intensive force shaping the global economy is the low-carbon transition: materials, production, transport, agriculture, and energy systems. 

In the energy system alone, BlackRock estimates that companies’ demand for capital will soar from $2.2 trillion per year today to $3.5 trillion¹ per year by the end of this decade ². The bulk will be centered on decarbonization — supply (oil and gas extraction and processing, renewable power plants, electricity transmission and distribution) and demand (automobiles, factory equipment, and building energy equipment). 

Our clients sense this opportunity and are asking us how to invest. In a survey of 200 global institutional clients that we conducted in June 2023, 56 percent said they plan to increase decarbonization investments over the next three years, and nearly half said it was their top priority. In the United States alone, 65 percent of clients are seeking fresh investments ³. 

To meet this need, BlackRock’s sustainable investment platform offers 500+ dedicated sustainable products and solutions with a combined $802 billion in AUM. Our transition suite offers private and public strategies with $138 billion in AUM, including $20 billion in private investments, $43 billion in liquid active, and $75 billion in index strategies. BlackRock has made more than 130 private markets transition investments in over 20 countries, including in emerging markets across Asia, Africa, Latin America, and the Middle East ⁴.

For those clients wanting to align their portfolios with a net-zero pathway or track global temperature increases, we provide whole portfolio solutions, product choice, and transparency about a fund’s alignment to sustainability metrics. And for those who want to limit or exclude exposure to particular sectors, we offer screened funds or bespoke implementations. 

Transition investing for the United Arab Emirates — and bolstering blended finance 

At COP28 in Dubai, the United Arab Emirates’ ALTÉRRA climate action fund selected BlackRock as one of three initial managers for a new $30 billion investment vehicle. We were awarded $2 billion, split between BlackRock private debt and infrastructure equity.  

ALTÉRRA has committed $100 million to co-invest alongside our blended finance fund, Climate Finance Partners (CFP). CFP is one of the world’s leading private-public partnerships for investing in decarbonization projects in emerging markets. Its blended finance structure utilizes catalytic capital, including from governments and philanthropies, to mobilize a broader institutional fundraise and accelerate flow of capital into emerging markets. BlackRock announced a $673 million final close of CFP at COP26 in Glasgow in 2021. To date, CFP has invested in the largest onshore wind farm in Africa, an independent power producer and renewable electricity developer in the Philippines, an operator and developer of solar PV power projects in Thailand, and a distributed solar developer and energy company in Brazil – with a projected combined pipeline of 4 GW of renewable capacity. 

Growth equity with Decarbonization Partners 

We entered the growth equity space in 2021 by launching a joint venture with Temasek, the Singaporean sovereign investor. Decarbonization Partners is a dedicated late venture capital and growth equity platform, targeting de-risked technologies in the clean energy, electrification, and green materials spaces. It addresses a current gap in the climate capital stack: scaling innovative decarbonization technologies globally. The Decarbonization Partners Fund I has completed six investments to date, raised over $1.3 billion from institutional investors and is actively deploying capital. The team has made investments in areas such as battery technology, low-carbon hydrogen, advanced mobility platforms, and sustainable materials. 

Brown to green materials – a public markets equity approach 

The transition is dependent on the raw materials that undergird it – requiring substantial investment in metals and materials. Sourcing them is a major contributor to global carbon emissions in itself. Decarbonizing how we source material – and investing in materials at the core of the transition, like copper – is part of the “brown to green” transition. In May 2021, the International Energy Agency projected that up to $450 billion investment a year would be required for materials alone by 2050. BlackRock evaluates companies in this space to identify firms that are best positioned to decarbonize their operations and have the resources and capacity to implement changes in realistic timeframes. We brought this approach to market through our “Brown to Green Materials Fund,” launched in June 2023. 

New Zealand initiative – a model for private and public sector cooperation 

New Zealand is one of the global leaders in climate finance and renewable energy. Over the coming years, we believe there will be significant investment to bring in more wind, solar, and geothermal plants, as well as improved transmission and storage. Last year, we announced plans to launch a New Zealand-focused climate infrastructure strategy, created on behalf of the country’s institutional clients – including the New Zealand government. The initiative aims to provide access to greater pools of capital for the New Zealand companies building the country’s renewable energy future. With a target raise of NZ$2 billion, it’s the largest single-country low-carbon investment initiative we’ve created to date. As the world looks for ways to bring the private and public sectors together in the transition, BlackRock and New Zealand’s climate infrastructure strategy can serve as a model. 

BlackRock’s low-carbon transition strategies and partnerships embody our fiduciary duty to our clients. By nurturing innovative solutions through Decarbonization Partners, focusing on the ‘brown to green’ shift with targeted funds, and fostering development through the New Zealand initiative, BlackRock is helping our clients shape a low-carbon future. 

This material is provided for educational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are subject to change. All financial investments involve an element of risk. 

1. Unless otherwise noted, source for data is BlackRock and monetary figures are in USD

2. BlackRock Investment Institute, “Tracking the low-carbon transition,” July 2023

3. BlackRock, “Global perspectives on investing in the low-carbon transition,” September 2023

4. As of December 31, 2023