Larry Fink is an American businessman and the co-founder, chairman, and CEO of BlackRock. His company is the world’s largest asset manager, with $8.59trn in assets under management as of December 31 2022.
Fink started BlackRock in 1988 and initially focused on managing fixed-income assets, particularly mortgage-backed securities and other bond-related investments.
Over time, the firm expanded its range of services, entered new markets, and evolved into one of the world’s influential investment management firms. The takeover of Barclays Global Investors (BGI) in 2009 was central to this.
So when the head of the biggest investment manager in the world says he believes the greatest investment opportunity of our lifetime is ‘decarbonisation’, the whole world should take notice.
Fink’s take
Like Warren Buffett, Fink has started writing to investors and CEOs.
In his 2022 letter to CEOs, Fink wrote: “I believe the decarbonizing of the global economy is going to create the greatest investment opportunity of our lifetime. It will also leave behind the companies that don’t adapt, regardless of what industry they are in.”
Fink’s optimism about the investment potential stems from the fact that the decarbonisation trend is not just confined to a specific sector or industry. Instead, it’s a transformative force that will touch virtually every corner of the global economy.
As societies shift toward greener practices and technologies, companies that embrace sustainability and adapt to this new reality are likely to thrive.
On the flip side, companies that fail to adapt to the changing landscape and continue to rely heavily on carbon-intensive practices may face significant challenges.
Such businesses could become less attractive to investors and may find themselves lagging competitors, or caught out by regulation and legislation changes.
How can I benefit?
Fink believes that the “next 1,000 unicorns won’t be search engines or social media companies, they’ll be sustainable, scalable innovators – startups that help the world decarbonize and make the energy transition affordable for all consumers.”
So, in essence, Fink believes that sustainable innovators are the way forward. These are not just companies producing green energy, but firms across a host of sectors from “cement, steel, and plastics; shipping, trucking, and aviation; agriculture, energy, and construction.”
His emphasis on scalable innovators resonates with major investor Cathie Wood’s narrative and her dedicated focus on disruptive technology with significant scalability potential.
Scalable innovators
So maybe the first place I could start as an investor is Wood’s ARK portfolio, specifically ARKQ. This is where she invests in autonomous transportation, robotics and automation, 3D printing, energy storage, and space exploration. It’s a highly innovative area with significant developments the decarbonisation space.
Investing in individual startups as an single investor can be risky. However, a more prudent approach would be to consider investing in ETFs, or funds like ARKQ. In turn, this allows for risk diversification by spreading investments across a multitude of companies within the fund’s portfolio.
Indeed, a multitude of other ETFs and funds focus on investments in this promising area. Perhaps it is worth giving the Scottish Mortgage Investment Trust another thought.
But by conducting in-depth research, investors have the opportunity to discover and select their own sustainable innovators that align with their investment objectives.
