The world’s largest investor and the circular economy: BlackRock
In October 2019 BlackRock launched a circular economy public equity fund.
Membership status: Strategic Partner
As a leading global asset manager, BlackRock aims to help more and more people experience financial well-being, whilst working with its clients to contribute to a more equitable and resilient world. Founded in 1988 and headquartered in New York, BlackRock has a global portfolio, with more than USD 9 trillion of assets under management as at the end of Q3 2021.
BlackRock is committed to its focus on sustainable investing, believing that it delivers better outcomes for investors. It currently has 136 environmental, social governance (ESG) funds and is making sustainable investments the standard for its clients. As part of the Climate Action 100+ investor-led initiative, BlackRock also asks companies for enhanced corporate disclosure and to align their business strategy with the goals of the Paris Agreement.
Blackrock first partnered with the Foundation in 2019 to bring together the power of investment and the value creation opportunity of a . As Strategic Partner, it aims to accelerate the transition and play a role in addressing major issues such as climate change, biodiversity loss, and pollution.
In October 2019, BlackRock launched its first actively managed circular economy fund in partnership with the Foundation – a strong signal to other investors and companies. The Fund aims to drive investments in businesses already contributing to, or benefiting from, the transition to a circular economy, and currently has more than USD 2 billion in assets under management. The Foundation provides BlackRock with expert insights and guidance on circular economy principles and practices that are used to inform the investment methodology of the Fund.
BlackRock also endorsed the Foundation’s 2020 report Financing the circular economy: capturing the opportunity with its Vice-Chairman Sir Robert Fairbairn stating that “This timely report highlights the opportunities presented by the circular economy for investors seeking to create long-term value and the growth we are already seeing in this market. The report is being published as we at BlackRock have witnessed strong growth in our circular economy fund [...] demonstrating investor appetite in the market.”
“The concept of circular economy is so important. It’s a foundational blueprint and if we could get more of the money owners to agree that this is a good way to invest, not just for social reasons, not just for environmental reasons, but for investment reasons, performance reasons.”
- Larry Fink, CEO & Chairman, BlackRock
As the first step in its work with the Foundation, BlackRock launched the BlackRock Global Funds (BGF) Circular Economy Fund in 2019. This thematic fund is designed to drive investment in businesses already benefiting from, or contributing to, the transition to a circular economy. The Fund excludes investments in companies that extract fossil fuels, with the companies listed falling into three categories:
Adopters: Companies that are adopting the principles of a circular economy in their business operations, in a manner that has a meaningful and positive impact on the value of the company. For example, Adidas has committed to 100% recycled polyester in its trainers by 2024.
Enablers: Companies that provide innovative solutions enabling others to become circular, such as by offering sharing or resale platforms, or innovative sorting and recycling technologies. An example is Tomra whose ‘reverse vending machines’ allow consumers to return glass bottles and cans to supermarkets.
Beneficiaries: Companies that benefit from the transition to a circular economy, such as those that will see increased demand for their products resulting from shifts away from certain hard to plastics. For example, Ball Corporation has seen significant growth in demand for its aluminium packaging as companies look for alternatives to plastic packaging.
BlackRock’s circular economy fund raised almost USD 1 billion in its first year, from just USD 20 million seed funding in October 2019. As of July 2021, the Fund has grown to more than USD 2 billion in assets under management. A 2021 report pointed to plastics, technology, healthcare and fashion as key sectors with high circular economy growth potential, closely aligned with the sectors identified in the Ellen MacArthur Foundation’s 2020 report.