"The next 1,000 unicorns won't be search engines or social media companies, they'll be sustainable, scalable innovators," said the BlackRock chief.
REUTERS/Yuri Gripas
The investing world is just at the beginning of a "tectonic shift" of capital into sustainable ventures, BlackRock CEO Larry Fink said in his 2022 letter to clients, telling them every company and industry will be transformed by the transition to a net-zero world.
The head of the world's largest asset manager said sustainable investments have reached $4 trillion in the past two years since he wrote that investors were increasingly recognizing that climate risk is an investment risk and that actions and ambitions towards decarbonization also have increased.
"I believe the decarbonizing of the global economy is going to create the greatest investment opportunity of our lifetime. It will also leave behind the companies that don't adapt, regardless of what industry they are in," with that view also applicable to cities and countries that don't prepare for the future, Fink said in his yearly letter released Tuesday. "The decarbonization of the economy will be accompanied by enormous job creation for those that engage in the necessary long-term planning."
The remarks signal a more bullish shift in tone on green investing. A year ago, his 2021 letter said the "climate transition presents a historic investment opportunity."
Fink, who co-founded BlackRock in 1988, noted his his latest missive that the auto industry has been racing to produce electric cars.
Meanwhile, engineers and scientists are working on how to decarbonize cement, steel, and plastics as well as the transportation, agriculture, energy, and construction sectors.
"The next 1,000 unicorns won't be search engines or social media companies, they'll be sustainable, scalable innovators – startups that help the world decarbonize and make the energy transition affordable for all consumers," he wrote. "We need to be honest about the fact that green products often come at a higher cost today. Bringing down this green premium will be essential for an orderly and just transition."
"Bold incumbents" must also take action in decarbonization efforts as they have an advantage with capital and technical expertise, the 69-year-old CEO said. As there's an unprecedented amount of capital looking for new ideas, he said, incumbents need to be clear about how to succeed in a net-zero economy.
He said most stakeholders ranging from shareholders, employees, communities, and regulators now expect companies to work on decarbonizing the global economy.
On a broader level, Fink said stakeholder capitalism is not about politics.
"It is not a social or ideological agenda. It is not 'woke.' It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper. This is the power of capitalism."
