BLACKROCK has launched a new climate fund that it says will support the transition to a low-carbon economy by investing in private debt markets. 

The product will become part of a transition investing platform at BlackRock that the asset manager says is worth more than US$100 billion. It will be managed by a team of private debt investors together with sustainability and transition investing specialists from across the firm, an e-mailed statement indicated on Thursday (Oct 5). 

“The strategy focuses on the transition to a low-carbon economy as one of several mega forces driving investment opportunities,” James Keenan, chief investment officer and global head of private debt for BlackRock, said in the e-mail.

Climate transition has emerged as one of the most popular ESG fund strategies in the US, having risen 304 per cent in the 18 months to June, a recent Morningstar report showed. Such figures add some nuance to speculation around the extent to which political backlash against ESG is hobbling the investment strategy in the US.

Despite the political headwinds, more ESG funds are being launched than liquidated. Globally, 90 ESG funds were closed so far this year, compared with 253 that were opened. Even in the US, 25 more ESG funds were created than shuttered.

BlackRock, which is the world’s largest asset manager, said its new climate transition fund responds to client demand for transition-oriented solutions.

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According to a BlackRock survey of investors, 98 per cent have set a transition investment objective for their portfolios and 75 per cent of institutional investors indicated that they have net-zero objectives.

The new BlackRock fund will use a proprietary Climate Transition Rating Framework launched by the asset manager across its Global Private Debt platform, “to focus borrower selection on companies at a variety of stages of transitioning to net-zero emissions”, the company said. BLOOMBERG