Wespath and BlackRock Collaborate to Launch New Low-Carbon Economy “Transition Ready” Investment Strategy

Wespath Benefits and Investments (Wespath) and BlackRock, Inc. have launched a new approach to low-carbon investing. The “Transition Ready” strategy seeks to deliver long-term competitive financial returns relative to standard performance benchmarks and directs capital to companies best positioned to facilitate the global transition to a low-carbon economy. The strategy was co-designed by Wespath and BlackRock, and incorporates proprietary data and insights to evaluate a company’s transition readiness.

Wespath, which invests over $23 billion on behalf of United Methodist pension participants and institutions, has committed $750 million across US domestic and International equity market accounts, replacing a portion of its market cap-weighted index exposures. “As a fiduciary, we believe companies positioned to benefit from the transition to a low-carbon economy are attractive long-term investments,” said David Zellner, Wespath’s Chief Investment Officer. “Capturing a return premium associated with these risks and opportunities required a new and innovative approach.”

The launch marks another offering of BlackRock’s expanding sustainable investing practice. “We start with the premise that the future will look different than the past across a number of sustainability-related issues,” said Brian Deese, Global Head of BlackRock Sustainable Investing. “The transition to the low-carbon economy is one of these issues that presents a potential for significant disruption across the energy, transportation, building and consumption sectors. What we have designed together is a new approach to low-carbon investing that seeks to deliver enhanced financial performance and improved environmental characteristics in our clients’ portfolios, through a risk-managed approach.”

The strategy was built on the investment conviction that public policies, emerging technologies, and physical impacts associated with concerns about climate change are creating winners and losers across companies, industries and countries, impacting long-term investment performance. Wespath and BlackRock developed a new investment framework and “Transition Readiness” methodology to evaluate a company’s core business involvement and natural resource management practices associated with the low-carbon transition. The framework seeks to reflect a company’s future preparedness for the transition and considers a variety of measures, including a company’s exposure to energy production, carbon efficient technology, energy management, water consumption, and waste production.