The world’s largest asset manager BlackRock has created a new unit called Transition Capital. Transition Capital’s goal is to boost investments to shift to a low-carbon economy.
BlackRock announced the new unit in an internal memo, saying that it will work with portfolio managers and the company’s capital markets team.
Transition Capital is part of BlackRock Alternatives. According to the memo, the key purpose of setting up the new unit is:
“to source and invest in proprietary transition-focused opportunities across asset classes and geographies.”
BlackRock’s Transition Capital Unit
BlackRock is one of the world’s leading providers of investment, advisory, and risk management solutions. It manages around $8 trillion in assets.
The new Transition Capital unit will work with the firm’s colleagues to develop new investment strategies and funds. It will also help deepen the company’s research in the field while working alongside BlackRock Sustainable and Transition Solutions.
Overseers of sustainable investing in BlackRock said that:
“We believe many hundreds of billions, even trillions of dollars per year, will be invested through the transition and we have spent the past several years becoming a global leader in transition investing to ensure our clients have the tools they need to navigate it.”
The memo also said that creating the new unit is part of the asset manager’s major goal. That’s to be the global leader in transitioning portfolios, businesses, industries, and countries to a low carbon economy.
Dickon Pinner, the former head of McKinsey’s sustainability growth platform, will run the Transition Capital unit. With experience as a reservoir engineer, Pinner helped clients benefit from the energy transition at McKinsey.
Pinner will report to BlackRock’s Vice Chairman Philipp Hildebrand and the global head of BlackRock Alternative Investors Edwin Conway. He will also sit on BlackRock Alternatives Executive Committee and senior sustainability committees.
Institutional Demand for Energy Transition
According to a report, 6 out of 10 asset owners in North America say that combating climate change is a strategic goal. And over half of the responders agree that financial institutions like BlackRock are responsible in helping cut carbon from high emitters.
The surveyed individuals include professionals and asset owners as well as adviser firms. They’re part of pension funds, insurers, banks, and sovereign wealth funds.
- 60% of them said that they consider energy transition finance as a major commercial opportunity. Others said it’s also part of their strategies.
BlackRock’s decision of setting up the Transition Capital comes ahead of the next UN Conference of Parties in Egypt next month (COP27).
It also comes timely for the company as regulators push businesses and investors to speed up their climate efforts.
Also recently, BlackRock has been positioning itself on climate change but received criticism from some politicians that it’s boycotting fossil fuels.
Yet, at the same time, the company is also scrutinized for not using its stance to gain greater effect by cutting back finance to heavy emitters.
With its new Transition Capital unit, BlackRock remains strong in advancing its role in the global energy transition.