BlackRock has introduced the BFM Brown to Green Materials Fund, a UK-domiciled mutual fund aimed at meeting investor demand for sustainable investment opportunities. The fund focuses on companies in essential materials sectors such as metals, mining, cement, chemicals, steel, and construction—industries expected to benefit from the global shift towards decarbonisation.
Unlike traditional sustainable funds that often prioritise renewables, the Brown to Green Materials Fund targets “overlooked sectors” with significant potential for environmental transformation. The fund invests in companies that, while high carbon emitters today, have credible plans to decarbonise. These firms are expected to achieve higher valuations by reducing sustainability risks, lowering operational costs, and benefiting from reduced capital requirements.
“Companies which are high emitters today but have credible plans to decarbonise could offer significant investment opportunities,” said Evy Hambro, Global Head of Thematic and Sector Investing at BlackRock. “This strategy provides clients with exposure to companies leading emissions intensity reduction efforts, potentially gaining a first-mover advantage as the low-carbon materials market develops.”
The fund is the first UK-domiciled mutual fund to carry the Sustainability Improvers label under the UK’s Sustainable Fund Disclosure Regime (SDR). This label identifies funds that invest in assets with evidence-based potential to enhance environmental or social sustainability over time. At least 70% of the fund’s assets align with sustainability goals, assessed through BlackRock’s SDR Improver framework.
The fund builds on the performance of BlackRock’s BGF Brown to Green Materials Fund, launched in June 2023 for European investors. Currently managing approximately $78 million, the European fund achieved 88% of portfolio companies progressing on decarbonisation goals, 76% targeting emissions intensity reductions of over 20%, and an average 6.4% emissions intensity reduction across holdings from 2022 to 2023.
Olivia Markham, Managing Director and Portfolio Manager at BlackRock, highlighted the potential for companies navigating the “brown to green” transition to achieve higher market valuations, “We expect global adoption of lower carbon technologies to drive faster-than-expected demand growth for essential materials, boosting prices and earnings for producers.”
The fund is managed by Evy Hambro, Olivia Markham, and Hannah Johnson, experienced professionals from BlackRock’s thematics and sectors team. The D share class carries an ongoing charges fee of 0.92%.
As part of its sustainability strategy, the fund supports investments in companies poised to benefit from the increasing adoption of low-carbon technologies. These materials are expected to experience a surge in demand as industries work to reduce emissions and transition to cleaner operations. “What drives share prices now, and makes a positive difference to the world, is what happens moving forward rather than what’s already happened,” Hambro noted.
