The world’s largest stock investor is warning market participants to take climate change seriously, even if they (still) don’t believe the earth is warming and human activity is to blame.
“Even if you are skeptical of global warming and its causes, we think it is prudent to appreciate the regulatory momentum behind it,” the BlackRock Investment Institute warned in a white paper published last week. “Governments are moving to curb and eventually reduce greenhouse gas emissions.”
BlackRock oversees US$4 trillion in investments.
Climate regulation “should open new opportunities to make money on a low-carbon transition,” notes E&E Publishing’s Energy Wire, citing the white paper. “But it also raises the risk that some investments could collapse in value.” The paper “is evidence that some of Wall Street’s largest players are factoring climate into their thinking, or are at least considering whether they should,” Rahim writes.
The decarbonization process will be gradual enough that lower-cost fossil fuel producers will have time to adapt, BlackRock opined. But the paper drew an analogy to investment guru Warren Buffett’s comment on the early days of the automobile: while it would have been hard for investors to pick the winners when the industry included thousands of companies, it would have been easy to see who was losing and “short horses.”
“Avoiding the losers within those sectors makes much more sense than trying to pick every technology winner,” investment strategist Ewan Cameron Watt told Rahim.
