Sustainable

themes:
Turning values into value

Rob Powell, CFA

Head of Thematic & Sector
Product Strategy
June 2021

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount
originally invested. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation
to buy or sell any securities or financial product or to adopt any investment strategy. The opinions expressed are as of Tuesday 1 June 2021 and may change as
subsequent conditions vary. MKTGH0621E/S-1662483-1/19
What is
thematic
investing?
Identifying a global trend
or change
Investing without geographical
or sector constraints
Investing in companies poised
to benefit

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Cyclical themes

Volatility Asset valuations Interest rates Currency values

Magnitude

Time

For illustrative purposes only.

MKTGH0621E/S-1662483-3/19
Structural themes

Longer-term in nature
Magnitude

Driven by powerful forces

Time

For illustrative purposes only.

MKTGH0621E/S-1662483-4/19
What are BlackRock’s
key megatrends?

Climate change Demographics Changing

Rapid Technological
and resource and social economic
urbanization breakthrough
scarcity change power

MKTGH0621E/S-1662483-5/19
“ Megatrends are
high probability
outcomes in an
uncertain world”
Evy Hambro, Global Head of Thematic & Sector Investing at BlackRock.

MKTGH0621E/S-1662483-6/19
2020 was a record year where
thematics gathered $60B
282
Industry active & index thematics AUM ($B)
246 12%

10%

BlackRock
Others

109
88%
8% 90%
74
66
7%
8%
37
92%
7% 93%
92%
93%

2016 2017 2018 2019 2020 Jan-21

Data: Morningstar as at 31 January 2021. Figures based on proprietary thematics universe that only includes pure thematic funds. Data shown in USD.

MKTGH0621E/S-1662483-7/19
2020 was a record year where
thematics gathered $60B
3-year Compound
Annual Growth Rate

199% Climate

96% Tech & Fintech

191% Multi-thematic

Category
153% Health & nutrition
Net New
Business 407% Future consumer
(US$B)
3115% Mobility
Jan-21
96% Security 2020
2019
2018
153% Other 2017

Data: Morningstar as at 31 January 2021. Figures based on proprietary thematics universe that only includes pure thematic funds. Data is shown in USD.

MKTGH0621E/S-1662483-8/19
Behind the growth in thematics

Common myths dispelled — Accelerated disruption

more than just marketing Crises are agents of change, investors have looked to
Themes have been more resilient through the crisis capture permanent COVID-19 behaviour changes

Investors see value in

thematics across the cycle Sustainability halo
Investors increasingly looking to allocate to disruptive Sustainable/climate-related themes have benefitted
themes across the cycle to hedge against future black from regulatory tailwind and increased investor focus
swan events

MKTGH0621E/S-1662483-9/19
BlackRock’s thematic platform

Multi-thematic
$83M assets

$31B
We have designed a $31B thematics
platform offering both index and Active thematics
alpha single-theme products, as $12.0B assets
well as multi-theme solutions.

AUM Index thematics

$19.1B assets

Source: BlackRock, as at 31 January 2021. Figures are shown in USD.

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Regulatory Societal Economic
force force force

Thematic investment

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From a linear economy…
Take Make Use Waste

…to a Circular Economy — Recycle Design

regenerative by design
The move from a take, make, use and waste
economy to one in which goods are recycled,
reused and used for longer to design waste Reuse Make
out of the system.

Use

Source: BlackRock, as at February 2021. For illustrative purposes only.

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Major factors driving the shift
towards a circular economy
Regulation
China banned waste imports from January 2018

China/HK
18,000
Other Asia
G7
15,000 Europe

12,000
Tonnes

9,000

6,000

3,000

0
2017 2018 2019

Source: Regulation: UN Comtrade data, 31/12/20; Society: ThredUp US GlobalData Survey US, 31/01/19, Economics: Berenberg 30/06/18.

MKTGH0621E/S-1662483-13/19
Major factors driving the shift
towards a circular economy
Society
18–37-year-olds are adopting second-hand apparel 2.5x faster
2017
2019
Percentage buying second-hand apparel
40% 37%

29%
30%
26%
Percent

21%
19%
20%
16%

10%

0%
Boomers Millennials Gen Z

Source: Regulation: UN Comtrade data, 31/12/20; Society: ThredUp US GlobalData Survey US, 31/01/19, Economics: Berenberg 30/06/18.

MKTGH0621E/S-1662483-14/19
Major factors driving the shift
towards a circular economy
Economics
Signatories to EMF Global Commitment on plastic, by sector

60 57

50 46
Number of signatories

40

29
30

20
20
13
10 11
10 6

0
Others Cons durables Plastic suppliers Materials Retail & leisure Recyclers Packaging Cons staples

Source: Regulation: UN Comtrade data, 31/12/20; Society: ThredUp US GlobalData Survey US, 31/01/19, Economics: Berenberg 30/06/18.

MKTGH0621E/S-1662483-15/19
Global investment opportunities
from disruption across
multiple industries
Companies that
“We are trying to change Companies that adopt the principles
a system, not one supply alternative of the circular
business. We need to materials or services economy in a
change the way people that contribute to a manner that has a
think, the way things are circular economy. Circular meaningful and
positive impact on
designed, the materials Economy their value.
that are put into them…”
Dame Ellen MacArthur

Source: BlackRock. For illustrative purposes only. Subject to change. References to specific companies and their issuers are for illustrative purposes only and are not intended and should not be interpreted as
recommendations to purchase or sell such securities.

MKTGH0621E/S-1662483-16/19
Thematic outlook 2021

Climate emergency Differentiation in tech

to drive demand Positive vaccine news will see normality return but the ‘new
normal’ will continue to benefit disruptive themes in tech
Regulation, consumer preference and economics to
accelerate demand for climate-related thematic solutions

Reopening to benefit Thematics adoption

cyclical themes to accelerate
As countries across the world continue to leave states of Using a combination of themes to access disruption across
lockdown, cyclical and COVID-hit themes can benefit the cycle will become increasingly commonplace

Source: BlackRock, For illustrative purposes only.

MKTGH0621E/S-1662483-17/19
Risk warnings
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.
Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher
volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.

MKTGH0621E/S-1662483-18/19
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