blackrockEnvironmental Social and Governance considerations are becoming more important for investors. Adam Avigdori, Co-Manager of the BlackRock Income and Growth Investment Trust plc, discusses how they draw ESG analysis into their investment process



On the BlackRock Income and Growth Investment Trust, we are looking for companies that generate a high return on capital and can grow dividends over time.

In order for companies to do this, they need to score highly on a range of financial factors, but non-financial factors are equally important to ensure those returns are sustainable. This is where our environmental, social and governance (ESG) analysis comes in.

This part of our analysis has always been important. However, as issues such as climate change come under greater scrutiny from policymakers, consumers and regulators, we are conscious that shareholders are becoming increasingly sensitive about owning any company that isn’t actively managing the associated risks.

However, we have always felt that considering ESG factors is the best way to manage businesses over the long term for all stakeholders.


Embedded ESG


Whilst we have no direct ESG mandate, these factors have always been an integral part of our analysis.

In our 1,000+ company meetings each year, we seek to understand how companies are performing, the industry dynamics they face, what differentiates them versus their competitors and importantly how sustainable this competitive position is, and therefore how it is likely to evolve over time.

This research is complemented by our analysis of the ecosystem surrounding the company; understanding the company’s relationships with its customers, regulators, suppliers, employees and shareholders.

‘We believe that companies that promote sustainable relationships with all their stakeholders are better positioned to mitigate risks and to sustain their financial returns’

We believe that companies that promote sustainable relationships with all their stakeholders are better positioned to mitigate risks and to sustain their financial returns over the long term. Our analysis of the ecosystem highlights both the risks as well as the opportunities facing companies over the long term.

We are particularly interested in the growing interdependencies between stakeholders as the focus on ESG increases.

For example, a company may differentiate its products or services by reducing their environmental footprint.

However, this can also differentiate the company as an employer and influence its ability to attract and retain talent as employees are increasingly responsive to companies’ ESG practices.

This in turn can influence the financial factors as well as influence other stakeholders such as the shareholders and the cost of capital.


Beyond financial factors


As such, while analysis of financial factors such as its revenue growth, profitability, cash generation and allocation, the balance sheet and return on capital are vitally important, our analysis of ESG factors provides us with conviction that these returns are sustainable over the long term.

Within our environmental analysis, we consider companies that have low absolute and relative resource intensity and have a clear understanding of how they are using carbon and water. We like to see a company improving its resource efficiency and helping others to reduce their resource footprint.

‘We like to see a company improving its resource efficiency’

Our analysis of social factors includes looking for a commitment to high and improving standards of health and safety. We want to see robust management of human resources – a living wage, a good working environment, plus an analysis of labour practices along the supply chain.

Evidence of a sustainable relationship with both suppliers and customers is also vitally important for long-term growth.

‘Governance’ involves understanding a company’s risk management and mitigation processes, its relationship with regulators and its management remuneration strategy.

We want to ensure that a company’s capital allocation policies are supportive of its long-term strategy. Additionally, we look at the composition of the Board, including factors such as independence, diversity of tenure, experience, geography and gender.


Team support


In undertaking this ESG analysis, we are supported by BlackRock’s large internal team of ESG specialists. They provide us with data and insights to keep us well informed of sustainability considerations.

Armed with the necessary data and tools, we can bring this information into our investment processes.

Additionally, BlackRock has a large Stewardship team. We partner with our colleagues in Stewardship to engage with companies regularly. We believe this engagement helps align companies’ behaviours to maximise the potential for long-term shareholder value creation.

This trust aims to deliver long-term consistent growth in capital and income to our investors. We believe this analysis of ESG factors helps us deliver these dual goals for our shareholders. They are part and parcel of creating a sustainable business for the long term.

Unless otherwise stated all data is sourced from BlackRock as at November 2019.



Risk Warnings

Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.

Trust Specific Risks

Liquidity risk: The Fund’s investments may have low liquidity which often causes the value of these investments to be less predictable. In extreme cases, the Fund may not be able to realise the investment at the latest market price or at a price considered fair.

Gearing risk: Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.

Important Information

Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.

The Company is managed by BlackRock Fund Managers Limited (BFM) as the AIFM. BFM has delegated certain investment management and other ancillary services to BlackRock Investment Management (UK) Limited. The Company’s shares are traded on the London Stock Exchange and dealing may only be through a member of the Exchange. The Company will not invest more than 15% of its gross assets in other listed investment trusts. SEDOL™ is a trademark of the London Stock Exchange plc and is used under licence.

Net Asset Value (NAV) performance is not the same as share price performance, and shareholders may realise returns that are lower or higher than NAV performance.

The BlackRock Income and Growth Investment Trust plc currently conducts its affairs so that its securities can be recommended by IFAs to ordinary retail investors in accordance with the Financial Conduct Authority’s rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. The securities are excluded from the Financial Conduct Authority’s restrictions which apply to non-mainstream investment products because they are shares in an investment trust. Any research in this material has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally.

BlackRock has not considered the suitability of this investment against your individual needs and risk tolerance. To ensure you understand whether our product is suitable, please read the fund specific risks in the Key Investor Document (KID) which gives more information about the risk profile of the investment. The KID and other documentation are available on the relevant product pages at We recommend you seek independent professional advice prior to investing.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.

© 2019 BlackRock, Inc. All Rights reserved. ID: MKTGQR1219E-1041175-4/4


This is a non-independent marketing communication commissioned by BlackRock. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.


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