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Alternative Market Briefing

BlackRock pushes for climate aware investments

Wednesday, September 07, 2016

Benedicte Gravrand, Opalesque Geneva:

Investors can no longer ignore climate change, says BlackRock, the world's largest asset manager, and should incorporate it into their own investment process. That way, they can diminish climate risks, exploit opportunities and have a positive impact while boosting investment returns.

In a report called Adapting portfolios to climate change, BlackRock lists four channels of market risks and opportunities: Physical (weather events and rising temperature); Technological (better energy storage, renewable energy); Regulatory (climate awareness becoming good corporate governance); and Social (changing consumer preferences and advocacies).

In terms of time horizons, regulations could have an immediate influence, so short-term investors are more vulnerable to them. Medium-term investors can take advantage of economies’ transition to a lower-carbon world, often through new technologies. Longer-term investors, such as pension funds, are more exposed to physical risks, stranded assets and the impact of climate change on economic growth.

"We believe climate risk factors have been under-appreciated and underpriced because they are perceived to be distant," said Ewen Cameron Watt, senior director of the BlackRock Investment Institute. "However, perceptions are changing as governments and businesses are grappling with how best to combat climate risk. The pace of change and the contours of the transition to a low-carbon......................

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