It’s been called a win-win development and, as far as tackling climate change goes, it’s one of New Zealand’s biggest steps to date.
Working alongside our Government, BlackRock will chip in with a $2 billion private fund to invest in businesses and technologies that could help take our electricity consumption to 100 per cent renewable by 2030.
The committed amount is just a skerrick of the total investment needed to achieve 100 per cent, which BlackRock priced at $42b.
It is also small change compared with BlackRock’s total assets under management of US$8.59 trillion at the end of last year - although down from a record US$10t in 2021).
The Government will not commit money directly to the fund but it’s thought the New Zealand Super Fund and the Accident Compensation Corporation are likely contributors.
BlackRock chairman and CEO Larry Fink calls it the largest single-country low-carbon transition investment initiative BlackRock has created.
“It will enable New Zealand companies to access greater pools of capital to build climate infrastructure across the country’s energy system including in wind power, solar power, battery storage, electric vehicle charging and natural capital projects.”
Fink says this could be a pathway for other deals with other nations and private enterprises.
Why would the world’s largest asset manager open its investments department to Aotearoa?
As Herald business journalist Madison Reidy pointed out yesterday, BlackRock is a big adherent of sustainable finance.
It set up a climate infrastructure division in 2012, while Fink has hung his hat on “ESG” investment - an acronym that stands for environmental, social and governance outcomes but encompasses the broader ideology of using money to do good.
While we may shrug at the sobriquet, New Zealand still has a global reputation for environmental purity and an intrepid history of innovation.
There are other parallels: New York-based BlackRock is the first foreign-owned company allowed by Beijing to operate a wholly owned business in China’s burgeoning mutual fund industry. New Zealand too walks in line with the United States while doing business with Beijing.
BlackRock Australasia chief executive Andrew Landman is unequivocal about why the company is in New Zealand. “This is really about providing a great return in an asset class that our clients want.”
This is a business deal, one that fits the strategy of one of the world’s largest financial institutions like a glove.
BlackRock isn’t without blemish. The company has held investments in oil and gas around the world, weapons investments, and there are human rights issues with reports some investments in China are linked to the exploitation of the Uyghur population.
So, be not flattered. This is about money. As Fink once stated: “We focus on sustainability not because we’re environmentalists, but because we are capitalists”.
However, there is no reason for New Zealand not to take advantage when such an offer presents itself.
Eyes wide open, there is much to be gained and, in an existential crisis such as climate change, much is at stake.