It is surely positive to see the focus of BlackRock's CEO Larry Fink towards the necessity of the green transition. As we see record high investments in sustainable solutions, USD 4 trillion according to Fink, it is important to think beyond the act of investing capital and explore how we can achieve the systemic change so desperately needed to create a more carbon neutral and regenerative society.
First, it is important to acknowledge that this transition will not happen solely through technology innovation of a few companies as it sometimes could be understood from the headlines. The transition needed for world impact is much broader where design, culture and collective engagement will as much drive the transition of the whole value chain process.
80% of environmental impact decided in the design phase
Research shows that 80% of the environmental impact of a product is decided in the design phase. Clever design and production decisions optimizing how much material is really needed, durability and ease of recycling have a huge impact on CO2 and energy efficiency.
It is important to see new circular materials emerge on the production side, however they also need to be tried and tested, chosen for the right products, and intelligently designed to have any impact or business success. Not to mention the cultural aspect of changing the behavior of consumers and enterprises, decreasing the market share of high CO2 polluting products.
The emphasis of capital is important to drive the change. However, it is as important, both for the capital owners and the world, that the use of capital is clever, focusing on leveraging the whole value chain for results.