BlackRock's Guide to Sustainable Investing: A Comprehensive Roadmap for Financial Stability and Environmental Stewardship

Introduction

In today's rapidly changing financial landscape, sustainable investing has emerged as a crucial strategy for safeguarding long-term financial stability and ensuring a healthy planet for generations to come. BlackRock, the world's leading asset manager,** recognizes the immense potential and importance of sustainable investing and has dedicated itself to empowering investors to align their portfolios with their values without compromising returns.

Defining Sustainable Investing

Sustainable investing encompasses a range of investment approaches that consider environmental, social, and governance (ESG) factors alongside traditional financial metrics. These factors include:

• Environmental factors: Climate change, resource scarcity, pollution
• Social factors: Human rights, labor relations, social justice
• Governance factors: Corporate transparency, ethical business practices

By incorporating ESG considerations into investment decisions, investors aim to:

• Reduce risk and protect portfolio value
• Drive positive social and environmental impact
• Generate long-term financial returns

Why Sustainable Investing Matters

Financial Impact:

• Research suggests that ESG-integrated portfolios can outperform those that do not consider ESG factors in the long term.
• For example, a study by McKinsey & Company found that ESG-aligned companies have an average return on assets (ROA) that is 50% higher than non-ESG-aligned companies.

Environmental Impact:

• Investing in sustainable companies supports businesses that are mitigating environmental risks and advancing sustainability.
• According to the World Economic Forum, the global transition to a low-carbon economy could create 115 million jobs by 2030.

Social Impact:

• Sustainable investing promotes social justice, human rights, and labor standards.
• By engaging with companies on ESG issues, investors can influence positive change in the workplace and society at large.

How to Implement Sustainable Investing

1. Define Your Goals:

Start by identifying your investment objectives and sustainability priorities. Consider the following questions:

• What environmental, social, or governance issues are you most concerned about?
• How much risk are you willing to take?
• What are your long-term financial goals?

2. Research and Evaluate:

Conduct thorough research on potential investments, considering their ESG performance and industry leadership. Utilize resources such as:

• MSCI ESG Ratings
• Sustainalytics ESG Risk Rating
• CDP Climate Change Database

3. Construct Your Portfolio:

Based on your research, allocate your investments across a diversified portfolio of sustainable companies, funds, and ETFs. Include both thematic (e.g., clean energy) and integrated (e.g., ESG-screened stock indexes) investments.

4. Monitor and Engage:

Continuously monitor your investments' ESG performance and advocate for sustainability through shareholder engagement. Particip