By Lynda Kiernan
U.S.-based investment giant BlackRock, the world’s largest investment manager managing approximately $7 trillion on a global scale, has raised its stake in Australia’s Treasury Wine Estates (TWE) acquiring shares valued at about A$1 billion (US$680 million).
The acquisition of shares, which raised BlackRock’s stake from 6.21 percent in April 2019 to 8.32 percent, were spread across transactions occurring in December 2019 and January 2020, according to the ASX.
This move follows recent announcements made by both BlackRock and TWE.
In 2018 BlackRock made it known that it intended to shift its investment capital into more sustainable schemes, and has issued an open letter for 2020 to its portfolio CEOs emphasizing the “significant and lasting impact” posed by climate change on economic growth and prosperity. BlackRock said that this risk – which has been substantiated by extensive research conducted by a range of organizations including the UN’s Intergovernmental Panel on Climate Change, the BlackRock Investment Institute, as well as McKinsey – is “compelling investors to reassess core assumptions about modern finance”.
Investors are increasingly bringing their questions and concerns to the manager, who stated that the physical risks as well as how climate policy will affect costs, prices, and demand across global economies are at the fore.
“These questions are driving a profound reassessment of risk and asset values,” noted the open letter. “And because capital markets pull future risk forward, we will see changes in capital allocation more quickly than we see changes to the climate itself. In the near future – and sooner than most anticipate – there will be a significant reallocation of capital.”
In a separate response letter to its clients, BlackRock committed to making sustainable investment models a standard, saying that all active portfolios and advisory strategies will be fully ESG integrated by the end of 2020. It will also be exiting its coal investments, developing proprietary quantitative tools to measure ESG risks and to provide transparent, publicly available data on sustainability and carbon footprints.
TWE owns a portfolio of iconic brands including Penfolds, Wolf Blass, Rosemount Estate, and Wynns Coonawarra Estate, the bulk of which are produced in South Australia and account for about half of the country’s wine output (and 80 percent of its premium wine output), and is known for its sustainable production methods.
Last year the company also signed the Porto Protocol, a global forum committed to undertaking best practices to reduce the impact of climate change.
“Our commitment to preparing for and adapting to climate change is integrated into our business operations, and the signing of the Porto Protocol will provide a platform for us to share best practice on climate change mitigation and adaptation techniques,” said Carolyn Coon, global corporate affairs director, TWE.
Last year also saw the launch of Sustainable Winegrowing Australia, a unified sustainability framework designed for all of Australia’s producers, created by the Australian Wine Research Institute, McLaren Vale Grape, the Wine & Tourism Association, and with support from Wine Australia and Australian Grape and Wine.
This single framework builds upon the strengths of the existing Entwine Australia and Sustainable Australia Winegrowing programs, and is being managed by the Australian Wine Research Institute.
The company also announced in August 2019 its intentions to invest up to $215 million in its Wolf Blass Bilyara winery in the Barossa over the following two years which will result in expanded production, processing, and storage capabilities.
Furthermore, Australian wine exports increased by 4 percent over the 12 months to June 2019 to a value of $2.86 billion, and TWE’s revenue increased by 15.5 percent over the same time period to reach $2.88 billion.
– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.