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Ellen Sheng contributed to this article.

Climate change is one of the most pressing concerns of our time, with the rising cost of catastrophic weather events, more regulation, clean energy innovation, and changed consumer preferences all contributing to its importance. This involves new risks for investors, as well as new opportunities.
“In just a few years, the idea that climate risk implies investment risk has gone from novelty to something approaching conventional thinking in the financial world,” says Armando Senra, president of iShares Americas. “We believe that the global investors who are the quickest to prepare their portfolios for the new era of climate investment will reap the greatest potential benefits.”
There wasn’t much choice for individuals interested in climate investing until lately. You may either do your own research or pay a fee to have a professional do it for you. Sustainable exchange-traded funds (ETFs), diversified collections of assets (like mutual funds) that trade on an exchange, provide investors with an easy and low-cost opportunity to invest in the burgeoning low-carbon economy (like stocks).
“There are approximately 600 sustainable ETFs globally currently, up from roughly 30 a decade ago,” says Gargi Pal Chaudhuri, head of iShares Investment Strategy Americas. “The growing number of sustainable ETFs, particularly climate-focused ETFs, will provide new and accessible opportunities for all investors to have access to innovative strategies at a critical juncture in the transition to a low-carbon economy.”
Here are three ways to incorporate climate risks and possibilities into your portfolio using ETFs to help you get started with climate investing. Click through each carousel to discover more about each method and specific ETFs you might want to explore to help achieve a greener, more sustainable future while while pursuing your financial goals.

SOURCES:
1. Morningstar global data analysis by BlackRock (as of December 31, 2020).
2. Revenue or percentage of revenue thresholds for some categories (e.g., $500 million or 50%) and categorical exclusions for others are used to create screens (e.g. nuclear weapons). MSCI, the index provider for the iShares ESG Advanced MSCI USA ETF, screens companies with fossil fuel ties by excluding any company in the energy sector (as defined by GICS methodology) and all companies with an industry tie to fossil fuels (in particular, reserve ownership, related revenues, and power generation). Companies that meet the fossil fuel involvement screen but generate more than half of their revenue from alternative energy, have no industry ties to thermal coal or oil sands, or have fossil fuel reserves used most likely for energy applications, as evaluated by MSCI, will be added back.
3. MSCI, March 2021, “Foundations of Climate Investing: How Equity Markets Have Priced Climate Transition Risks.”
Ibid., 4.

IMPORTANT INFORMATION: Before investing, carefully evaluate the Funds’ investment goals, risk factors, charges, and expenses. This and other details can be found in the Funds’ prospectuses or, if available, summary prospectuses, which can be found at www.iShares.com or www.blackrock.com. Before investing, read the prospectus thoroughly.
Investing entails risk, including the possibility of losing money.
The types and amount of investment possibilities available to a fund with an environmental, social, and governance (“ESG”) investing strategy are limited, and as a result, the fund may underperform other funds that do not have an ESG concentration. The ESG investment strategy of a fund may cause it to invest in securities or industrial sectors that underperform the market as a whole or underperform other ESG-screened funds. Furthermore, the index provider’s chosen companies may or may not have positive or favorable ESG features.
The type and amount of investment options accessible to a fund that invests in securities of firms with minimal carbon exposure is limited, and as a result, the fund may outperform other funds that do not strive to minimize carbon exposure. Because of its low carbon exposure investment approach, a fund’s low carbon exposure investment strategy may cause it to invest in assets or industrial sectors that underperform the market.
Interest rate and credit risks are two examples of fixed income hazards. When interest rates rise, bond values usually fall along with them. The probability that the bond issuer will be unable to make principle and interest payments is referred to as credit risk.
The types and amount of investment options available to a fund with a green bond investing strategy are limited, and as a result, the fund may outperform other funds that do not have a green bond concentration. Because of its green bond investment approach, a fund may invest in securities or industrial sectors that underperform the market as a whole or underperform other green bond funds. Furthermore, green bond-funded projects may not result in direct environmental benefits.
BlackRock funds are managed actively, therefore their features will vary.
When comparing stocks or bonds to ETFs, keep in mind that investors in individual stocks or bonds do not pay management costs associated with fund investments.
Foreign currency risks, limited liquidity risks, less government regulation risks, and the chance of significant volatility due to bad political, economic, or other developments are all factors to consider while investing internationally. These risks are frequently amplified when investing in emerging/developing markets or in concentrated areas of a single country.
Funds that invest primarily in specific industries, sectors, markets, or asset classes may underperform or be more volatile than funds that invest in a variety of industries, sectors, markets, or asset classes, as well as the broader securities market.
Market risk and principal loss may not be protected by diversification and asset selection.
This information reflects a snapshot of the market at a certain point in time; it is subject to change; and it is not intended to be a prediction of future events or a guarantee of future outcomes. The reader should not consider this material to be research or investment advice about the funds, or any issuer or asset in particular.
The strategies described are solely for educational and illustrative reasons, and they do not constitute an advice, offer, or solicitation to purchase or sell securities or to adopt any investing plan. There is no assurance that any of the tactics mentioned will work.
Commissions, tax implications, and other transaction fees, which can considerably impact the economic ramifications of a given strategy or investment decision, are not included in the data.
This material is only intended to provide general information and does not take into consideration a person’s specific financial situation. This data should not be used as the sole basis for making an investment decision. Rather, before making an investment choice, an assessment of whether the information is relevant in particular circumstances should be undertaken, and consideration should be given to speaking with a financial advisor.
This information is not meant to be used as tax advice. For more information on their unique tax situations, investors should consult their tax professionals or financial advisors.
BlackRock Investments, LLC distributes the Funds (together with its affiliates, “BlackRock”).
MSCI Inc. and Dow Jones Indices LLC do not sponsor, endorse, issue, sell, or promote the iShares Funds. Neither of these firms makes any representations about the Funds’ suitability for investment. The companies listed above are not linked with BlackRock Investments, LLC.
BlackRock’s trademarks include iSHARES and BLACKROCK. All other trademarks belong to their respective owners.
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