BlackRock has launched a Climate Transition-Oriented Private Debt Fund (CPD), bringing together the company’s Global Private Debt platform and its investing knowledge in the global transition to net-zero emissions.
The CPD will finance companies that are at various stages of their net-zero emissions transitions, and the CPD team will apply selection criteria to borrowers to ensure they maintain climate transition characteristics. A team of private debt investors and sustainability transition investing specialists will engage with financed companies to reach carbon reporting and decarbonization targets. BlackRock asserts that companies should use smart climate planning in their business models to achieve resilience and improved credit quality in the long run.
BlackRock currently maintains a transition investing platform, valued at more than $100 billion, that allows clients options across index, active, and private markets to meet their specific needs.
“We are harnessing the breadth and experience of our global platform to deliver a quality credit portfolio that focuses on income,” said James Keenan, chief investment officer and global head of private debt for BlackRock. “The strategy focuses on the transition to a low-carbon economy as one of several megaforces driving investment opportunities. We look forward to continuing to develop, refine, and expand our private debt and transition investing platforms.”
Transition investments, or those allocated towards net-zero emissions progress, have become increasingly relevant, according to BlackRock’s Global Transition Investor Survey. Of the investors surveyed, 98% had set a transition investment objective for their portfolios, and 75% claimed they had net zero objectives.
BlackRock asserts that the transition to a low-carbon economy represents one of the largest structural changes in shifting profitability across economies. As policy changes, technological innovations, and consumer preferences trend toward a more climate-conscious world, a massive reallocation of capital may be expected in the transition to a zero-emissions economy. A recent Green Bond Report affirms these trends, claiming that ESG has gained importance even beyond its role as a portfolio objective and is cited as a company goal by many.
BlackRock explained that the new fund responds to this increased client demand for transition-oriented solutions and will help companies look to ESG as an opportunity for growth.
