BlackRock adds energy transition unit

A recent survey shows potential demand among institutional investors

BlackRock has created a unit within the company focused on the energy transition and hired McKinsey Sustainability head Dickon Pinner to lead it.

The company announced the new unit, Transition Capital, in an internal memo this week.

“The transition to a low-carbon economy presents historic investment opportunities and challenges for clients – on par with the rise of emerging markets and digitization in recent decades,” said the letter from global head of BlackRock Alternative Investors Edwin Conway and vice chair Philipp Hildebrand, who oversees sustainable investing. “We believe many hundreds of billions, even trillions of dollars per year, will be invested through the transition and we have spent the past several years becoming a global leader in transition investing to ensure our clients have the tools they need to navigate it.”

The new unit is part of BlackRock Alternatives. It will work with portfolio managers and BlackRock Capital Markets “to source and invest in proprietary transition-focused opportunities across asset classes and geographies”, the memo stated.

Further, Transition Capital will help design new investment strategies and funds, working alongside BlackRock Sustainable and Transition Solutions.

Pinner will report to Conway and Hildebrand, according to the memo.

At McKinsey, Pinner led the company’s sustainability growth platform, which helps clients benefit from the energy transition, the BlackRock letter noted.

Institutional demand

Six out of 10 asset owners in North America say that fighting climate change is a strategic goal for them, and more than half agreed that financial institutions have a responsibility to help reduce carbon among high emitters, according to a report Monday from Ninety One.

That investment manager surveyed 300 senior-level employees at asset owners and adviser firms globally, including pension funds, endowments, insurers, foundations, central banks, consultants and sovereign wealth funds.

A much smaller number, 17%, of asset owners in North America said that energy transition finance is among their strategies, although 60% said that they view it as “a major commercial opportunity”, Ninety One found.