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Blackrock doubles down on impact investing

Illustration by Jack D.

It’s a sign of growing investor interest in responsible investing: Blackrock Inc., the world’s largest asset manager with over $4.5 trillion in assets under management, has announced plans for a new impact investing initiative.

Billed as an attempt to unify the firm’s social and environmental investment offerings, Blackrock Impact will offer a combination of existing and new financial products geared toward tackling social problems, the company announced on Monday. Spearheading this initiative is Deborah Winshel, previously the president and CEO of The Robin Hood Foundation, a charitable organization dedicated to ending poverty in New York City.

Impact investing broadly captures any form of investment that simultaneously pursues positive societal impacts and financial returns. As Corporate Knights explained last year, it incorporates a range of emerging investment products, such as social impact bonds, microcredit financing, green building mortgages, social venture funds and so on.

Until recently, impact investing has been dominated by private foundations and a few banks. Goldman Sachs began to experiment with Social Impact Bonds in New York City in 2012. The Royal Bank of Canada, meanwhile, has dedicated $20 million of its assets to social impact investments.

What is significant about yesterday’s announcement is that large asset managers, such as Blackrock, appear to be responding to growing investor demand for a range of impact investing options.

“Today, many clients are looking for investment opportunities that advance social and financial goals at the same time,” explained Laurence D. Fink, Chairman and CEO of BlackRock in a statement. “While the roots of this movement can be traced back many years, the frequency and complexity of these mandates are increasing.”

Blackrock has already embraced a range of investment strategies with environmental and social considerations, such as $214 billion managed through “values-based mandates.” It also rolled out a low carbon ETF last year and has actively invested in green bonds, a fixed-income investment used to finance projects that help combat or adapt to climate change.

Rich Kushel, chief product officer and head of strategic product management at Blackrock, explained in an interview with Reuters that one of the main goals of Blackrock Impact is to expand the scope of issues currently being targeted by impact investing. “What if you wanted to drive outcomes like poverty elimination or hunger elimination or the development of medicines?” Kushel said.

New investment products that tackle these issues are set to hit the market very soon, said Kushel.

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