Data snapshot: Investors tilt towards real assets strategies for the transition

Institutional investors are marginally more inclined to increase allocations to energy transition strategies in infrastructure and real estate than in other areas of private markets, according to a survey commissioned by BlackRock. The survey, which sought opinions on all asset classes, liquid and illiquid, also showed that investors would like to see more transition and sustainable investing products available in real estate.

With infrastructure assets at the heart of energy generation, transmission and storage, it is unsurprising that this where investors are focusing efforts amid the transmission to a low carbon economy. Real estate, meanwhile is estimated to account for 37 percent of global CO2 emissions, according to the United Nations Environment Programme‘s 2021 data.

While venture capital / growth equity was among the 10 most commonly cited asset classes that investors would increase their allocation to, private equity was not. Seemingly earlier stage, emerging technology plays are viewed as offering a more compelling compelling decarbonisation opportunity than later stage buyouts.

The BlackRock survey, which polled 200 institutional investors, half of which were in Europe, also found that 75 percent had set a net-zero target and 52 percent had an objective of year-on-year emissions reduction. Only 2 percent had set no energy transition objectives. Most investors (56 percent) are looking to increase their allocations to transition strategies in the next one to three years.