Apac investors eyeing active funds exposed to beneficiaries of decarbonisation: BlackRock
Janice Lim
INVESTORS in the Asia-Pacific are showing strong interest in active funds with a high exposure to companies and sectors that benefit from the energy transition and other sustainability-related factors, said a BlackRock executive.
Emily Woodland, head of sustainable and transition solutions for Apac at the asset manager, said: “These companies are beneficiaries of the structural tailwinds we’re seeing in the real economy through the shifts... in government policy and technological innovation, as well as societal and customer preferences that are really driving the transition.”
She was speaking at a webinar on Thursday (May 18) about BlackRock’s approach to sustainable and transition investing in Asia.
In the area of alternative investments, Apac investors are also interested in the roles of private equity and private credits in facilitating decarbonisation in the region, she added.
She expects innovation in this space to grant companies access to not just public markets, but the entirety of their capital stack.
“That plays all the way through from venture capital and disruptive startups that are creating technologies that will help us decarbonise the economic system... to how we transform hard-to-abate sectors; how we move them from brown to green,” she said.
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“How we think about this in real assets and public markets... all the way through to the decommission and wind-down of certain high-intensity assets in certain circumstances” are key as well, she added.
While institutional investors in this region tend to focus on decarbonising their core portfolios to meet their net-zero targets, wealth investors are more interested in thematic strategies, said Bonnie Leung, head of sustainable and transition solutions for Asia ex-Japan at BlackRock.
“They’re looking for things that are close to what they do in daily life,” she said, also at the webinar.
“So, for example, if they’re seeing a lot of electric vehicles on the road, that would be something that they would be interested in investing (in).”
Some investment themes that have been gaining ground over the last few years include the future of transport, sustainable energy, as well as agriculture, she added.
Given that Apac is responsible for half of the world’s carbon emissions, this region is also where there are plenty of opportunities, noted Elaine Wu, head of sustainable investment research for Apac at BlackRock Investment Institute, the asset manager’s research arm.
She said: “In order to transition the (higher-emitting) sectors or regions here, investments will have to be made so that different sectors will adopt the cleaner methodology for production. And so that’s where we see the opportunities.”
One example would be the power sector, where alternative methods of power generation, such as solar and wind, have achieved technological advancement and are supported by government policies.
Although sustainable investing has grown in importance among Apac investors, BlackRock noted that they tend to have a more pragmatic approach to sustainability. Economic considerations form the basis of most of their investment decisions, rather than values or regulation.
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