Additional $600m for low-carbon solutions as BlackRock forms new investment partnership

 The partnership believes it can raise $1bn initially

Called ‘Decarbonization Partners’, the partnership has committed to initially invest a combined $600m in initial funds, that will be used for late-stage venture capital projects and existing early growth equity private funds. Funding will be raised by third parties as well as from Blackrock and Temasek’s own teams. Beyond the initial $600m, the partnership believes it can raise $1bn.

Funding will go towards technologies, products and systems that contribute to the delivery of a net-zero world while also providing long-term, sustainable financial returns at the same level as their higher-carbon predecessors. A statement from BlackRock revealed that focus areas will be next-generation renewable energy generation and distribution systems, emerging low-carbon fuels, autonomous vehicles, electric vehicles and low-carbon solutions for the building and manufacturing sectors. On the latter, this includes innovative materials with less embedded carbon, as well as technologies to improve process efficiency.

Temasek is notably aiming to halve financed emissions by 2030 and reach net-zero by 2050. The firm’s chief executive said that meeting this target will require “collective efforts with like-minded partners”.

BlackRock does not yet have an internal net-zero target. However, it has made many climate announcements in recent months. Most recently, it became one of the 43 new members of the  Net Zero Asset Managers Initiative. Before that, it updated climate disclosure and risk requirements for energy firms and other high emitters, after taking voting action against several big-name corporates on climate grounds.

“The world cannot meet its net-zero ambitions without transformational innovation,” BlackRock chairman and chief executive Larry Fink said.

“For decarbonisation solutions and technologies to transform our economy, they need to be scaled. To do that, they need patient, well-managed capital to support their vital goals. This partnership will help define climate solutions as a standalone asset class that is both essential to our collective mission and a historic investment opportunity created by the net-zero transition.”

An update from Aviva Investors

In other green finance news, Aviva Investors has signed a £72.9m transition loan agreement with property investment management and development firm Commercial Estates Group (CEG), to assist CEG’s low-carbon transition.

Under the facility, which has a seven-year period, CEG will benefit from lower margins if it meets its sustainability KPIs. Topics covered include energy efficiency and embodied carbon and relate to a string of six office developments. Notably, the office developments collectively have more than 100 tenants, so engagement and behaviour change will play a role in meeting KPIs.

CEG’s chairman Gerard Versteegh said the agreement should “lead to a long, fruitful collaboration on many more projects to come”.

Aviva Investors, meanwhile, emphasised its commitment to originating £1bn in sustainable transition finance for the real estate sector by 2025. The commitment forms part of a broader, group-wide strategy to reach net-zero by 2040

Sarah George

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