2020 saw transformational net-zero climate change commitments from businesses, governments and investors. [Net zero means emitting no more greenhouse gases that you remove from the atmosphere.] Many of those commitments are for net-zero before the scientifically-established deadline of 2050, as called for in the Paris Agreement.
The UK was the first country to pass its net-zero commitment into law, back in June 2019, and in 2020 we saw commitments from China, the European Union and other countries.
Joe Biden, the new President of the US, was elected on a pledge to aim for net-zero emissions by 2050 and rejoined the Paris Agreement on his first day in office.
BlackRock sees opportunities of net-zero goal
BlackRock, one of the biggest investment firms, is led by CEO Larry Fink. Each year, Larry writes a letter to his investors and a separate open letter to CEOs. He aims to ‘highlight issues that are pivotal to creating durable value’, including management of capital, long-term strategy, purpose and climate change. In 2015 he urged business leaders to resist the pressure for short-term value extraction over value creation for longer-term owners, and in 2018 he set out his belief that every company should serve a social purpose, showing how they contribute to society as well as delivering financial performance.
By 2020, BlackRock announced it was making sustainability its new standard for investing, to help its clients build resilient portfolios and achieve better long-term returns. It’s created a new standard for climate data and introduced nearly 100 new sustainability funds.
BlackRock itself is committed to a net-zero goal, and is helping its investors ‘capture opportunities created by the transition’.
CEO Larry Fink believes the world is ‘on the cusp of a Teutonic shift – a fundamental reallocation towards sustainable assets’ with investments in sustainable products during 2020 almost doubling over the previous year.
Fink says ‘No issue ranks higher than climate change on our clients’ lists of priorities. They ask us about it nearly every day.’
Todays products, tomorrow’s resources
Circular approaches can reduce production and minimise waste in other ways. Keeping products in use for longer, and/or getting more productive use out of them (for example through resale, sharing or pay-per-use) slows down the manufacturing flows. Aiming for zero waste, ensuring that any unused or excess products and materials become ‘food’ for another process, also reduces the level of extraction and material production.