Decarbonization: A Catalyst for Change:
BlackRock and Temasek share a common vision of private investors’ role in reducing carbon emissions, seeking substantial cuts especially over the next decade. Larry Fink emphasizes the significance of private investors stepping up to catalyze change in this area.

Addressing Climate Change with Venture Capital:
To tackle decarbonization effectively, new technologies are crucial, as existing technologies are either unavailable or expensive for green applications. Larry Fink draws attention to the need for innovation, as solar and wind took 30 years to reach commercial equivalence with hydrocarbons.

Exploring New Frontiers of Technology:
The world admits 51 billion tons of carbon daily, requiring a 1.7 billion tons annual reduction. New technologies are essential to reduce costs of emerging tech and address other carbon emitters. Carbon storage and recapture technologies are crucial for a better world.

Investment Opportunities in Sustainability:
Investors are keen on capturing green opportunities across the spectrum, from growth areas to common infrastructure like wind and solar. Transition risk is viewed as a transition opportunity for investments, with the partnership between Temasek and BlackRock serving as an example.

Collaboration’s Strengths:
Temasek and BlackRock complement each other in terms of investment arms and experience in early-stage companies. BlackRock’s data analytics capabilities, investor sourcing abilities, and access to companies for solution testing strengthen the joint venture.

Investment Committee and Deal Sourcing:
A joint investment committee will be formed to pick investors and approve investments. Existing investors from both Temasek and BlackRock may be involved.

BlackRock’s Focus on Data Analytics and Sustainability:
BlackRock’s investments in data analytics and sustainability are key to the venture’s success. This focus is deemed a crucial growth development for BlackRock’s entire organization.

Success Metrics and Risk Acceptance:
The primary objective is to generate positive financial returns while simultaneously reducing carbon emissions. The venture is willing to accept lower returns or take on more risk to maximize carbon reduction impact.

Venture Success:
Primary success factor: Developing innovative solutions that drive down the carbon abatement cost curve and lead to commercialization. Financial returns are crucial for long-term viability and attracting more capital.

Targeted Returns:
Aiming for a 20% IRR, in line with most early-stage funds. Realistic approach acknowledges that some investments will fail, while others may yield substantial returns.

Technology Focus:
Emphasizing the development of new technologies and applications for decarbonization. Recognizing the potential of emerging technologies to transform the world, as exemplified by video calls.

Initial Fund Size:
Setting an initial pool of money at $5 billion for testing and building proof of concept. Investments will vary in size, ranging from small to large.

Collaboration with Traditional Companies:
Openness to partnering with traditional hydrocarbon companies with relevant expertise. Potential for joint ventures to create new processes for green hydrogen and other technologies.

Partnership Goals:
BlackRock and Temasek are collaborating to establish a fund dedicated to catalyzing change and value creation in hard-to-abate sectors, such as transportation, industrial processes, and the built environment. The fund aims to facilitate the development of solutions that contribute to the reduction of emissions and support the transition to a net-zero world by 2050.

Why BlackRock?:
BlackRock and Temasek share a long-standing relationship, including joint ventures in other areas. Both entities share a common understanding and commitment to sustainability, transition risks, and transition opportunities. The partnership is founded on a shared culture, common beliefs, and aligned objectives, which are essential for the success of long-term collaborations.

BlackRock’s Commitment:
BlackRock has a proven track record of leadership in sustainability, analytics, and data in the liquid markets. The company is dedicated to building this enterprise as a world-class leader in sustainability and decarbonization.

Challenges and Opportunities:
BlackRock acknowledges that other companies may have a head start in this field, but the company’s commitment to achieving its goals remains unwavering. BlackRock’s size and resources provide the potential for significant impact and the ability to scale up investments in sustainable solutions.

Conclusion:
The partnership between BlackRock and Temasek represents a significant step towards addressing the challenges of climate change and accelerating the transition to a more sustainable future. By combining their expertise, resources, and shared commitment, these two global leaders aim to make a meaningful contribution to the world’s decarbonization efforts.

Why BlackRock Is Expanding into Early-Stage Climate Tech Investments:
BlackRock, traditionally known for its strength in liquid markets and mature private investments, is venturing into early-stage climate tech investing, recognizing the significant opportunities in this space. The firm’s commitment to sustainability and belief in the tectonic shift toward climate transition drive this strategic move. BlackRock’s systematic and determined approach, coupled with its extensive resources and culture, positions it for success in this new investment arena.

Addressing the Green Premium Challenge:
Acknowledging the higher costs associated with green technologies compared to fossil fuels, BlackRock aims to accelerate the abatement of the cost curve. The involvement of private capital, along with incentives and disincentives, can encourage the transition to greener options and drive down costs. The goal is to reach cost levels that make green technologies commercially viable and competitive with non-green alternatives.

Investment Timeline and Capital Requirements:
The venture is an early-stage fund with a typical time frame of 10 years, plus one-year extension options. The focus is on identifying promising companies and technologies that can make a significant impact in sectors seeking green solutions. Substantial capital is needed to address the green premium and scale up green technologies, such as biofuels, green hydrogen, green cement, and green steel.

The Role of Infrastructure Development:
Larry Fink emphasizes the need for infrastructure development alongside early-stage technology investments to create a more renewable world. The U.S. government’s infrastructure plans present an opportune moment to launch the fund and align with these broader efforts.

Conclusion:
BlackRock’s foray into early-stage climate tech investing signals the firm’s commitment to sustainability and its belief in the transformative potential of green technologies. The fund’s focus on overcoming the green premium and its emphasis on infrastructure development highlight the multifaceted approach required to address the challenges of climate transition.

Global Collaboration for a Just Transition:
Larry Fink emphasizes the need for global cooperation to address transition risks. He believes that if governments and policymakers worldwide declare societal responsibility for this issue, it will accelerate technological advancements and innovation.

Government’s Role in Accelerating Progress:
Fink highlights the importance of government involvement in driving societal change. He believes that if governments, particularly at the upcoming COP26, recognize the need for all businesses to participate in this transition, it will lead to rapid progress.

CEOs Embracing Change:
Fink observes that even hesitant CEOs are now moving more swiftly than ever before to address sustainability issues. This change in attitude is driven by the recognition that a just transition to a net zero world is essential for economic growth and a sustainable future.

Bridging the Green Premium:
Fink stresses the significance of reducing the green premium, the additional cost associated with sustainable products and technologies. He believes that achieving a net zero world requires affordable green energy and economic growth for all parts of the world.

Global Investors and Corporations’ Responsibility:
Fink emphasizes the role of investors and corporations, both public and private, in contributing to a just transition. He believes that all stakeholders must work together to address these issues and achieve a sustainable future.

Sustainability-Focused Investments:
Dilhan Pillay discusses Tomasic and BlackRock’s investments in sustainability-focused sectors. These investments are directed toward seven areas: food, water, waste, energy, materials, mobility, and the built environment.

Early Stage Investing’s Impact:
Pillay highlights the impact of early-stage investing in sustainability-focused companies. These investments support the development of innovative solutions and help create a more sustainable future.

Sustainable Solutions:
-Alternative proteins have transitioned from niche to mainstream, indicating a growing acceptance of innovative solutions.
-Green hydrogen, previously estimated to take years to become commercially viable, is showing signs of accelerated progress.
-Adequate capital investment is crucial to facilitate the widespread adoption of green hydrogen and other sustainable ventures.

Investor Appetite:
-Investors worldwide are increasingly seeking sustainable products and early-stage investments in the sustainability sector.
-Reducing the “green premium” associated with carbon footprints is a significant goal.
-Green hydrogen is expected to experience a faster-than-anticipated transition, disrupting current estimates.

Optimism for Humanity:
-The world is finally confronting the realities of climate risk, leading to a surge of interest in sustainability.
-The rapid development and distribution of COVID-19 vaccines within 10 months exemplify humanity’s capacity for rapid innovation in times of crisis.
-Technology advancements and focused efforts during the pandemic accelerated the recognition of climate risk as an existential health risk to the Earth.

Changing Investment Landscape:
-Investors, asset owners, policymakers, and corporate leaders are moving toward sustainability at an accelerated pace.
-Finance, as a driving force, is playing a crucial role in bringing forward solutions to address sustainability challenges.

Temasek’s Investment Posture:
-Temasek recognizes the ongoing complexity of the investment landscape, marked by rising yields, commodity prices, and potential inflationary threats.
-Temasek’s investment approach continues to adapt to this complex environment, seeking opportunities that align with its long-term sustainable investment goals.

Investment Roadmap:
BlackRock is developing a 10-year roadmap to build a sustainable portfolio by 2030. Focus on investing in sustainability-focused sectors and companies: food, water, waste, energy, materials, mobility, and built environment.

Portfolio Valuation:
Concerned about the value of companies in the existing portfolio 10 years down the road if business models don’t align with climate change adaptation and mitigation. Need to consider the right cost of capital for companies in light of transitional issues.

Airline Industry and Sustainable Aviation Fuels:
Airlines are a challenging sector in terms of climate change. Sustainable aviation fuels or advanced biofuels are seen as the solution, but they need time to become a reality. BlackRock aims to invest in solutions that can help abate emissions in the airline sector.

Larry Fink’s Investment Posture:
Remains constructive about the investment landscape despite record highs in stocks and rising 10-year yields. Emphasizes the transformative innovation driven by capitalism across various aspects of life. Acknowledges economic imbalances and sectors still affected by COVID, but believes markets are well-positioned for continued growth.

Factors Supporting Long-Term Equity Holdings:
Record monetary policy and fiscal stimulus. Increased cash on the sidelines. Longer life expectancies post-COVID, leading to a need for more long-term investing.

Interest Rates and Inflation Risk:
Interest rates need to go a little higher to combat inflation risk. However, Fink doesn’t expect interest rates to rise enough to disrupt equity valuations.

Climate Change as an Investment Opportunity:
Tackling climate change presents enormous investment opportunities. CEOs recognize the potential for their companies and the market as a whole.

Focus on Long-Term Investing:
BlackRock de-emphasizes short-term market fluctuations and emphasizes the strength of fundamentals for long-term investing. Optimistic about market growth over the next two years.

Stock Price as Performance Indicator:
For BlackRock, performance is constantly evaluated through the stock price, which serves as a public indicator of its success.

Tomasic’s Performance Evaluation Schedule:
Tomasic’s fiscal year ends on March 31st, but the company’s performance results are not disclosed until July.

Press Conference and Performance Announcement:
Tomasic holds a press conference in July to announce its financial performance for the concluded fiscal year.

Conclusion:
The host, Erik Schatzker, expresses his appreciation for the discussion and highlights the anticipation surrounding Tomasic’s upcoming performance announcement.