BlackRock Inc., the world's largest money manager, told clients that financial markets are just starting to price in the effects of climate change, which creates significant investment opportunities in industries including oil and gas.

Transitioning to net-zero carbon emissions will take decades and risks include energy price swings, BlackRock senior executives wrote in a letter to clients and a research paper. Investing in fossil fuel companies that are working to reduce their carbon footprint is an "underappreciated opportunity," according to the asset manager.

"Today there is a significant degree of uncertainty about the transition," wrote executives including Philipp Hildebrand, vice chairman, and Mark Wiedman, head of international and corporate strategy. "The issue, however, is no longer whether the net zero transition will happen but how—and what that means for your portfolio."

See also:

• How Sustainable Financing Is Driving Corporate Treasuries to Evolve
• Gaps in Climate Change Disclosures
• Are U.S. Execs out of Touch on Corporate Social Purpose?

BlackRock is positioning itself as a leader of renewable energy investing, but has also faced criticism from environmental groups for not doing enough to pressure fossil fuel companies. And even the most climate-progressive firms have found it difficult to completely ditch polluting industries when countries are still years away from clean energy.