BlackRock's Impact Investing team sits within the fundamental active equities division, which is spearheading sustainable investing. The BlackRock Impact Funds aim “to maximize long-term total returns, seeking to outperform their benchmarks, through active investment into companies whose core business areas are helping to address the SDGs through their products and services." The Impact Investing team is distinguished from the "ESG Investing“ teams, and focused on companies that are solving world problems.
The BlackRock impact team has researched the battery industry, which is connected to EVs, ESS, electrification, and energy gains. BlackRock Impact Investing owns a battery market leader, Samsung SDI, and was looking at the IPOs of two other major players, LG Energy and SK Innovation.
Ethan Kao '23, Yuna Ko ’23, James Malke ’23, and Victoria Sanchez '23 conducted research to create an overview of the battery and electric vehicle markets and leverage these findings to create a financial model that could be used to project revenues and capacity for battery companies. This research and model will aid BlackRock in making investment decisions.
Investors are becoming more sophisticated about investing in climate change, but have less visibility when it comes to investing in enhancing biodiversity around the world. Andrew Feierman '23, Jed Rooney '22, Rogier ten Have '22, and Marina Machin Alvarez '22 conducted research on emerging investable landscapes that enhance biodiversity, defining natural capital and ecosystem services with an investment lens, identifying major investment verticals that are aligned with biodiversity solutions, and ranking 12 business models that enhanced biodiversity according to three metrics: biodiversity impact, climate (GHG) impact, and investment opportunity.
Working with early-stage investment firm Elevation Ventures, Joshua Ward '22, Tim Lee '23, and Neimy Escobar '22 were engaged to map the climate tech ecosystem in Southern California. Having seen Southern California emerge as a center for electric vehicle innovation, Elevation Ventures and its partner organizations are seeking to develop the region into a major hub for next generation climate tech innovation. The fellows worked to identify key strengths and participants in the current ecosystem and performed a gap analysis to recommend focus areas to encourage growth. The team spoke with academics, executives, and investors through a mix of interviews and local site visits in Los Angeles and Orange County. Combined with the market research and industry analysis, these insights culminated in a 40+ page research report delivered to the client.
Inherent Group (IG) is an ESG-integrated investment manager driving increased investment in sustainability-linked strategies by demonstrating superior risk-adjusted returns. IG engages with companies to incorporate sustainability into their decision making as they believe doing so will lower their costs of capital. The firm manages multiple investment vehicles across equity and debt, public and private, all of which take a business-centric approach to fundamental analysis and utilize their proprietary ESG framework throughout the investment process to enhance decision making. To showcase these efforts and accomplishments, Brandon Martin '22 and Chris Battipaglia '22 researched reports published by other leading asset managers to inform IG’s first-ever sustainability report.
ROOM designs and produces modular workspace solutions that offer companies an affordable, sustainable, and flexible alternative to fixed construction and traditional office design. Priya Prasad '22, Sai Akshay Arun '23, Stephen Tsamblakos '23, and Mary Allison Lyons '23 aimed to quantify ROOM’s sustainability value proposition and identify opportunities for further emissions reductions. The team developed a model that ROOM can use to track environmental impact given annual sales of ROOM products, and discovered utilizing ROOM products in an office-space design can save up to 33 percent of cumulative carbon emissions as compared to fixed construction over a 10-year lifecycle and up to 10 percent of carbon emissions per office floor renovation (for score 1 and 2 carbon dioxide emissions for a 10,000 sq ft floor plan comprising ROOM and fixed construction designs). For all ROOM products, transportation was the largest contributor to emissions (over raw materials and energy to use the products). Opportunities for further emissions savings include: switching sourcing of materials from China to the US, sourcing materials closer to the office site, selecting suppliers who have/plan to develop their own science-based targets, and engaging in advocacy and enhancing in-house expertise to refine the team’s preliminary findings/model.
The voluntary carbon credit market is substantially behind in its ability to verify biochar-based projects and issue carbon removal credits. Existing verification leaders currently have no approved methodology to verify biochar projects, and there are substantial operational obstacles (i.e. equipping and training developing country farmers to utilize smartphones to track fertilizer usage) under the current biochar verification regimes. Chenjing Wang '23, Johnny Lee '23, Hanryano Lethe Sarungallo '22, and Divik Girdhar '23 researched on 11 verification options. Safi Organics’ chances to issue credits are limited today with only two verification bodies — European Biochar Certification (EBC) and Puro.earth. The team recommended Safi collaborate with EBC and the Ithaka Institute to determine the appropriate EBC standard, and partner with Biochar Life to design a pilot to train small-holder farmers on credit documentation and issuance. They also encouraged Safi to follow up with Puro.earth, Verra, Gold Standard, Climate Action Reserve for future eligibility in late 2022 and early 2023.
The team further identified 56 potential partners and concluded seven of them as the most relevant for Safi, based on experience in the region, biochar focus, track record in connecting carbon-sequestration projects to large buyers, and other metrics. They suggested Safi Organics get in touch with ACT Commodities, Climate Trust, South Pole, and VNV Advisory for future collaboration.
Milan Shah '23, Christelle Azar '22, and Aman Hans '22 helped generate a long-term carbon accounting strategy for the firm’s portfolio companies. Carbon accounting will help SJF baseline its investments’ emissions and lead portfolio companies to sustainable emission reduction strategies.
The team developed a case study detailing SFJ’s efforts to template a carbon accounting model that could be updated and used across SJF’s portfolio, select a carbon accounting software platform for SJF’s short- and long-term needs, develop criteria for assessing carbon accounting companies, and recommend a list of carbon accounting companies for SJF to consider. Based on their work, SJF selected and started onboarding a carbon accounting company.
To assess commercial opportunities and limitations for their product, Takachar tasked Grant Opperman '24, Hudson Hoyle '23, and Rahul Lamba '23 to develop a financial model for Takachar's novel, oxygen-lean torrefaction reactor. The team developed a bottoms-up economic model that included detailed cost breakdowns for all activities in the chip-and-haul forestry and biochar value chain. Results of the analysis quantified Takachar's value-add through more efficient transportation and reduced operating costs. Moreover, sensitivity analysis uncovered the important variables and assumptions that Takachar should seek to refine.