Australian investors ready to punt on progressive agenda: BlackRock

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Australian investors ready to punt on progressive agenda: BlackRock

By Simone Fox Koob

Australian investors are some of the most progressive in the world and local policy settings around climate action will support continued momentum around ESG investing, says the local deputy head of the world’s largest money manager Blackrock.

As Blackrock faces concerted pushback in the US over its sustainable investing practices, BlackRock Australia’s deputy head Jason Collins said a desire for environmental, social and governance (ESG) investing options was growing in Australia, led by local institutional investors, including the superannuation funds.

Jason Collins is the deputy head of Australasia and Head of iShares and Index Investments at BlackRock Australasia.

Jason Collins is the deputy head of Australasia and Head of iShares and Index Investments at BlackRock Australasia.

“In Australia, we have a climate where institutional investors are very progressive and very conscious of their social footprint,” he said.

“The energy transition is real, it requires huge investment. And government policy is really important in ensuring that takes place and we think it’s a pretty supportive environment in Australia.”

“In Australia, I’m very sanguine about the policy settings and the way that investors are looking at transition to a net-zero world,” Collins added.

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BlackRock, the world’s largest asset manager which controls almost $8 trillion worldwide, has been facing sustained blowback from Republicans in the US over ESG, with several states pulling money from the asset manager due to their ESG investments.

Nineteen attorneys general from states largely with Republican-dominated governments, including Texas, Arizona, Kentucky and West Virginia, have lashed out at BlackRock for pursuing a “climate agenda”, which they allege is at odds with generating returns for state pensions.

Asked whether there were any signs of similar pushback in Australia, Collins said that Australian and New Zealand institutional investors were “some of the most progressive investors in the world” and had led the push for more ESG options, which had then risen in popularity among retail investors.

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BlackRock offers a range of ESG products in Australia which remained popular, he said.

“We do offer choice, but we’ve been above the parapet around our views on net-zero and transition, and we actually have walked the talk here,” he said, pointing to the company’s commitment to invest more than $1 billion to help build batteries across Australia through energy developer Akaysha Energy.

BlackRock controls almost $8 trillion worldwide.

BlackRock controls almost $8 trillion worldwide.Credit: Bloomberg

“At the end of the day, we’re a fiduciary and we think good long-term investors plan for long-term outcomes and it’s incumbent upon companies to explain their long-term transition plan and disclosure is the key mechanism.”

Collins is also the head of iShares, Blackrock’s provider of exchange-traded funds, which track a particular index or sector and are traded on stock exchanges. He said BlackRock expected more take up of ETFs in Australia in coming years.

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“We think there’s a lot of room for growth,” he said. “The growth rates now in Australia over the next five years are probably expected to be greater than other parts of the world.”

BlackRock’s third annual iShares report found clients worldwide poured $US209 billion ($314 billion) into exchange-traded products.

The way ETFs are being used has evolved massively in the last few years, the firm also said, with active fund managers some of the biggest users of the products.

“What we’re seeing now is investors and portfolio constructors are illustrating their views through the tools available, whereas in the past, it may have been a binary ‘I’m going to go index here and active here’,” said Collins. “That’s probably the biggest change in the market.”

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“Investors want choice. And what we’re seeing is that choice is not binary. It’s not active, or index. It’s a combination ... the binary notion is gone.”

iShares launched a number of new products last year, and Collins said there was scope to release several more next year.

Heading into next year, he said that there would be a regime shift as a period of relatively stable growth and low inflation ended.

“What it means really is you need to rethink the way you manage portfolios,” he said. “The low volatility, low inflation, high-growth environment is over, and so it’s a time to watch your investments a lot more closely and be a lot more alert.”

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