Ignoring Climate Will Cost 25% of Global GDP, BlackRock’s Hildebrand Says

(Bloomberg) -- Ignoring the impacts of climate change may cost the global economy 25% of gross domestic product over the next couple of decades, said Philipp Hildebrand, BlackRock Inc.’s vice chairman.

The transition to a low-carbon economy is the most “significant reallocation of capital in history,” Hildebrand said today on a conference panel organized by the United Nations-backed Principles for Responsible Investment.

“If you ignore, you would do so at your peril,” he said, adding that climate is a genuine risk that will damage long-term investments. “As a fiduciary, it’s our duty to take these risks into account.”

Still, sustainable investing isn’t only about addressing climate change, Hildebrand said. The UN’s Sustainable Development Goals are a broad framework that includes issues other than global warming, and investors should focus on reversing social inequalities, he added. As well as supporting net-zero emissions goals through its investments, BlackRock also seeks a more inclusive society -- particularly where it operates -- as well as more responsible business practices, he said. 

Earlier this month, Hildebrand said capital markets globally will soon witness a seismic shift of money into products that promise to support environmental, social and governance goals. About a third of the $98 billion of long-term net inflows that BlackRock took in last quarter went into sustainable funds, the company said.  In all, BlackRock oversees about $9.5 trillion of assets.

ESG investments -- estimated at more than $35 trillion -- are coming under increased scrutiny from regulators and investors following claims of greenwashing -- exaggerating environmental credentials -- at major asset managers.

©2021 Bloomberg L.P.