BlackRock opens new ESG Insights Equity Fund
BlackRock, the world’s biggest investor company, has formed the Environmental, Social, Governance Insights Equity Fund, designed to make ESG investing easier for all.
Larry Fink, BlackRock CEO, told CNBC earlier this year that in conversations with investors, it was clear that they were more interested in tackling climate change, than dealing with cryptocurrencies.
“The amount of conversation we’re having on climate risk and how they should navigate portfolios is a major component of the conversation,” said Fink.
The fund is likely a result of these meetings and the international team is on board with the development.
"This launch marks another milestone in our sustainability offering to help savers build their pension and long-term investments in companies with a positive ESG profile," said Sarah Melvin, Head of UK.
Headquartered in New York City, the company has been moving towards a sustainable future for some years.
However, this step comes only one week after The European Union was criticised for employing BlackRock to assist in creating environmental rules for banks, despite BlackRock managing oil companies. This has led The EU ombudsman, Emily O’Reilly, to consider the strength of The EU’s rules regarding conflict of interests.
BlackRock, ESG and a positive contribution to society
In 2018, BlackRock had $6.29 trillion in assets under management. Larry Fink contacted other CEOs, informing them that BlackRock would no longer be interested in supporting companies who failed to positively contribute to society.
The company is steering itself in a people and planet positive direction and they are not alone.
In the 2020 Deloitte Global Millennial Survey, results showed that socially conscious Millennials valued ESG far greater than the Baby Boomer generation.
Businesses who want to remain in control are listening.
Financial service providers implement ESG
BlackRock is not the only financial services provider to publicly prioritise ESG.
- SRI Schwab (USA) highlights SRI (socially responsible investing), a combination of ESG and a deep consideration of traditional measures of risk and return.
- State Street (USA) is dedicated to assisting investors across the world in planting ESG values into their activities. “Through solutions that enable our clients to measure, manage and research ESG risks and opportunities, using our voice and vote to steer our portfolio companies to adopt more sustainable practices, we are working to build a more resilient and inclusive future,” a spokesperson said.
- Northern Rock (UK) has called for climate risks and opportunities to be incorporated across all asset classes. “At Northern Trust, we believe organizations with a demonstrated commitment to corporate social responsibility and sustainable investing create greater value for shareholders and key stakeholders,” said Mike O’Grady, President and Chief Executive Officer
What is a circular economy?
Over the next few centuries, historians will be researching the impact of net-zero targets made during the Coronavirus pandemic. Teachers will be helping students to revise what happened on the day the last drop of oil was burned. Archaeologists will be wondering “How did we get into this mess?” as they dig through ancient 21st century landfill sites, where some of the single-use plastic used this week will be slowly rotting.
A circular economy is a model of production with a sustainable future in mind, where manufacturers are aware of the infinite and finite resources which they use. Let’s break down what a circular economy is - and what it is not.
The linear model of production
A wasteful model of production is ‘take, make, dispose’, with a clear beginning, middle and an ending.
Companies buy the resources needed to make their product at the lowest possible price. The company then sells as many of the product as they can at an affordable price tol make a profit. This profit goes back into buying more resources to make more products and expanding the company. For example:
Take: A manufacturer pays farmers for an ingredient and takes it to their factory.
Make: The ingredient is used to make the desired item and sold to the consumer.
Dispose: When the product is no longer needed by the consumer, it is thrown away. The product may end up in landfill or the sea.
Finite resources and space
Waste is sent to landfills and into the sea, locations which are not sources of infinite space. Some of the ingredients used to manufacture products are also finite..
If production remains at its current rate, the planet is expected to run out of many essential resources throughout the next century:
Fresh supplies of zinc, silver, copper and gold will also be finished, within the next decade.
The ocean is suspected to contain more plastic than fish by 2050. Maybe even earlier if the plastic inside of the fish is included. The world’s largest landfill site is the Ghazipur garbage dump in India, which at one point was taller than the Taj Mahal (73m).
A circular economy seeks to eliminate waste disposed of in the ocean and minimise the use of landfills.
The circular economy model of production
A circular economy respects the space restrictions of current methods of production and waste, as well as the limit of materials and the environment.
Make: Manufacturers create something, with its future in mind. For example,
Use: The consumer buys the item and uses it. When the item has served its purpose, the consumer can return the item to the manufacturer or take it to a dedicated location where it can be repurposed.
Recycle: The item is taken away to be recycled, reused or repaired and begins its journey again, in the circular economy.
Who is implementing a circular economy?
As reported by Sustainability, retailer H&M has started a new initiative, Looop, where customers can donate their old or unwanted clothes at their local branch. These items are sent off to be remade into new products and sold to a new consumer.
Water, our planet's most precious resource, is naturally recycled - we collect water, use it and then flush it away. It is believed that every water molecule has been drunk at least four times, including by dinosaurs. So it’s only natural for recycling to permeate every other aspect of our lives in the circular economy.