Tesla stock (NASDAQ: TSLA) has been climbing steadily recently, and it could continue to skyrocket if BlackRock decides to invest more in the EV automaker soon. The investment management corporation’s CEO, Larry Fink, announced that BlackRock will be placing sustainability at the helm of their investment approach in a letter to the company’s clients.
In an interview with CNBC about BlackRock’s more climate-risk-conscious portfolio, Fink explained that sustainability has become a topic of choice in other companies and governments around the world. According to Fink, more scientific background, research, and his own team’s study on physical impact from climate change helped him make the decision to shift BlackRock’s priorities.
In his letter to BlackRock clients, Fink explained how climate risk affected the financial sector’s outlook of the future and current decisions.
“Will cities, for example, be able to afford their infrastructure needs as climate risk reshapes the market for municipal bonds? What will happen to the 30-year mortgage – a key building block of finance – if lenders can’t estimate the impact of climate risk over such a long timeline, and if there is no viable market for flood or fire insurance in impacted areas? What happens to inflation, and in turn, interest rates, if the cost of food climbs from drought and flooding? How can we model economic growth if emerging markets see their productivity decline due to extreme heat and other climate impacts?” questioned Fink in his letter.
Included in his announcement were the steps the investment management corporation would take towards a portfolio with sustainability as a focus. Find wrote these steps involved:
- “making sustainability integral to portfolio construction and risk management.”
- “exiting investments that present a high sustainability-related risk, such as thermal coal producers.”
- “launching new investment products that screen fossil fuels.”
- “strengthening our commitment to sustainability and transparency in our investment stewardship activities.”
According to Fintel.io, BlackRock already invests in Tesla. Recently converted TSLA-true-believer Jim Cramer shared his thoughts on BlackRock’s sustainability shift. The Mad Money host said that “TSLA is the ultimate Larry Fink stock." Cramer’s case seems valid.
Tesla is one of the companies around that world that is at the forefront of the sustainability movement. The EV automaker’s contribution toward sustainability in the auto sector and its impact is undeniable. Electric cars weren’t popular when Tesla first produced the Roadster when it was first founded in 2003. Now legacy automakers are releasing electric vehicles to jump into the EV market because they see there is a demand for sustainable vehicles.
If BlackRock does decide to invest in Tesla, TSLA shares could give the electric car maker even more momentum. Recently, Oppenheimer and Jefferies raised their prices targets for the all-electric car maker higher than US$600. Tesla stock could reach the US$600 range with a company like BlackRock’s support.
Fink’s decision to shift BlackRock’s investment approach with a focus on climate risk could lead other companies to do the same. TSLA could benefit from the shift since it is one of the most notable companies that strongly advocates sustainability, specifically in the auto industry.
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