US asset manager BlackRock and Singapore’s government-owned investment firm Temasek announced on April 13 that they agreed to establish a decarbonization partnership, and plan to launch a series of investment funds for carbon reduction, as reported by Caixin on the same day. Based on their agreement, BlackRock and Temasek will inject a combined USD600m as the initial capital, and also seek financing through third-party investors in the future. The total target scale of the first fund under the decarbonization partnership program will reach USD1bn, including capital from both companies.

Facing investment opportunities brought by climate change, Temasek and BlackRock believe that the decarbonization partnership will help define climate-related solutions as a standalone asset class. Early-stage growth companies focusing on the research and development of proven next-generation renewable and mobile technologies are the core of their investment funds, covering emerging fuel energy, power grid solutions, battery energy storage, electric vehicles (EV), and autonomous driving technologies, as well as emission control related areas in the construction and manufacturing industries.

The Paris Agreement aims to limit global warming within this century to below 2°C and pursue 1.5°C. According to the 2020 report of the United Nations Environment Program (UNEP), before 2030, the world needs to reduce fossil fuel production by roughly 6% annually to follow a 1.5°C-consistent pathway. However, current estimates still showed that the annual growth rate of fossil fuel production was about 2%. Based on this fact, many companies have begun to commit to achieving economic decarbonization for sustainable and green development. For instance, JPMorgan Chase will invest USD2.5tr in climate-related actions and sustainable development over the next ten years, with USD1tr of the plan earmarked for green projects, including renewable energy and clean technology. Barclays made commitments to incorporate climate impact into its financing decisions, for promoting the development of a net-zero carbon economy.

Sources:

https://www.blackrock.com/corporate/newsroom/press-releases/article/corporate-one/press-releases/temasek-and-blackrock-launch-decarbonization-investment-partnership

https://wedocs.unep.org/bitstream/handle/20.500.11822/34917/AN2020.pdf?sequence=3&isAllowed=y

https://www.cnbc.com/2021/04/15/jpmorgan-pledges-2point5-trillion-over-10-years-toward-climate-change.html

https://home.barclays/society/our-position-on-climate-change/

https://www.ceres.org/resources/reports/financing-net-zero-economy-measuring-and-addressing-climate-risk-banks

https://www.cnbc.com/2021/04/13/singapore-temasek-and-blackrock-commit-600-million-to-reduce.html