BlackRock targets ‘repair and prepare’ climate investments

Reuters/Muhammad Hamed

• 2023 climate disasters cost $57bn
• Opportunities in adaptation tech
• Segment not well recognised

BlackRock, one of the largest fund managers in the world, has identified investment opportunities in companies that are preparing for or repairing climate-related damage.

UAE President Sheikh Mohammed Bin Zayed has also announced that the government is to launch a $30 billion climate-related investment fund with asset management companies BlackRock, TPG and Brookfield announced as inaugural launch partners.

The fund, to be based in Abu Dhabi and called Altérra, will be the world’s largest private investment vehicle for climate change action and will aim to reach $250 billion globally by 2030.

Cop28 president Dr. Sultan Al Jaber, who will also chair Altérra’s board, said: “its scale and structure will create a multiplier effect in climate focused investment”.

Analysis from US-based BlackRock has revealed potential in companies providing solutions for climate adaptation and resilience.

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“They’re preparing companies and businesses to climate-related damage or they’re helping to repair it in the built environment,” Christopher Kaminker, head of sustainable investment research and analytics said.

In the year through to September, the total cost of disasters in 2023 was more than $57 billion, according to the National Oceanic and Atmospheric Administration (Noaa).

Speaking at a media event on Thursday on the sidelines of the Cop28 climate change conference in Dubai, Kaminker highlighted investment opportunities in emerging technologies aimed at improving water systems and other vital infrastructure.

“We’ve identified a group of companies now that we think are quite important companies and we don’t believe that the demand for their services is priced in,” he said.

“We think that it’s going to increase in the future and they’re not well recognised by the financial markets.”

BlackRock has a regional office in Dubai International Financial Centre (DIFC) and had over $8.5 trillion in assets under management (AUM) at the end of July.

It has seen AUM for its sustainable investment platform grow over six-fold since 2019 from $106 billion to $700 billion.

In 2021 the company achieved a $673 million final fund raise for the Climate Finance Partnership (CFP), a public-private finance vehicle focused on investing in climate infrastructure across emerging markets.

A global consortium of 22 investors including governments, philanthropies, and institutional investors committed to the fund raise, which was oversubscribed and exceeded its target of $500 million.

Philip Hildebrand, vice chairman of BlackRock, said they were waiting to pass the 75 percent investment mark for CFP before considering a second iteration.

According to BlackRock research, investment in low-carbon energy infrastructure in emerging markets could potentially triple by 2040, reaching $1.1 trillion annually by 2050.

“In an upside scenario, we anticipate a further $200 billion yearly from 2030 to 2050, totalling nearly $4 trillion – a 25 percent increase on our base case,” according to a report by the BlackRock Investment Institute.

Kaminker stressed that this was still 17-24 times below the actual amount required.

The report cautioned that a scenario of stagnant investment would see a 4.5 percent annual drag on economic growth, with an overall 6 percent reduction in the share of low or no-carbon energy use by 2050.

“Post-2030 investments could drop by an average of $50 billion yearly, resulting in a total reduction of over $1 trillion,” the report added.

“If we can’t find ways to mobilise public and private capital into emerging markets we’re not going to find where we need to get to,” said Hildebrand.