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BlackRock Invests in First Asset – Backed Notes for Solar Energy

Demand for green money market funds has so far come up against limited supply. The first-of-its-kind commercial paper from Credit Suisse could help fix that.

Simon Dawson/BloombergSimon Dawson/Bloomberg

BlackRock is putting $1.22 billion from its global money market funds, including its environmentally-aware lineup, into a first-of-its-kind asset-backed deal to fund solar energy projects. Credit Suisse developed the green asset-backed commercial paper specifically for solar energy deals in the U.S.

“Investors are increasingly seeking sustainable options for their cash management,” Thomas Callahan, head of BlackRock’s global cash management business, said in a statement. “We have been working to enhance the supply of green investments and in turn, provide a financing source for sustainable projects. Partnering with Credit Suisse on this issuance is an important advancement for the cash investment landscape, and we hope to provide our clients with further innovative green financing solutions in the future.” BlackRock’s sustainable money market funds have invested over $1.77 billion in green short-term issues over the last 12 months, according to the company.

The world’s largest asset manager launched its green money market funds in 2019. The Environmentally Aware Funds, called LEAF, invest in credit based on environmental, social, and governance factors. The objective of the funds is to invest at least 80 percent of assets — those that are not government or public securities — in short-term investment that have above average environmental practices. BlackRock uses MSCI or other third-parties to provide ESG assessments of credits. Five percent of net revenue from the LEAF funds is used to retire carbon offsets.

The funds have attracted $15.7 billion in assets, but supply of green investments is still somewhat limited. BlackRock expects the Credit Suisse commercial paper to spur similar deals in the future.

“As a pioneer in renewable energy finance, Credit Suisse is pleased to have arranged the first green ABCP note, helping to accelerate the energy transition with innovative transactions,” Jay Kim, global head of securitized products at Credit Suisse, said in a statement.

Larry Fink, chairman and CEO of BlackRock, has been moving aggressively to position the firm at the forefront of ESG and sustainable investments. In his most recent annual letter, Fink called for all companies “to disclose a plan for how their business model will be compatible with a net-zero economy.” That means the business needs to operate in such a way that global warming is limited to no more than 2 degrees Celsius above pre-industrial averages as well as curbing greenhouse gas emissions in 30 years.

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