In a novel ESG investing approach, asset management behemoth BlackRock has launched six new ETFs to offer publicly disclosed data on ESG implications for the assets held within each fund.
Launched in Europe, the new funds are aimed at improving ESG transparency by compiling data from MSCI with the ETFs providing an average ESG quality score and an assessment of the carbon intensity of their underlying portfolio.
The six funds are tracked across MSCI indices that examine security criteria to maximize ESG scores, and the ETFs screen out companies with exposure to nuclear weapons, civilian firearms, tobacco, thermal coal and oil sands and those violating UN Global Compact principles.
The funds use MSCI’s methodology to offer a lower-emissions intensity, with MSCI ranking companies on stock exchanges based on their carbon footprint. MSCI then excludes the top 20 percent by emissions intensity from the index.
BlackRock’s vice chairman Philipp Hildebrand says in a statement: ‘Europe is at the forefront of the sustainable investment movement. Across the region, sustainable investing is believed to be the future of investing and many European clients are pursuing the twin goals of addressing the world’s societal and environmental needs while generating the long-term risk-adjusted returns needed to fulfill their financial goals.’
BlackRock hopes the disclosures will help investors make better ESG-related investment decisions. ‘Our Sustainable Core ETF range is about setting a global catalyst for choice and transparency that allows investors to apply ESG considerations to the foundation of their portfolios,’ adds Carolyn Weinberg, global head of iShares at BlackRock.
BlackRock predicts the European ETF market for ESG assets will grow from $12 bn today to $250 bn by 2028, representing 60 percent of the estimated $400 bn global market for the funds.
Stephen Cohen, EMEA head of iShares at BlackRock, adds: ‘The way portfolios are built in Europe is undergoing an upheaval, with investors demanding more when it comes to transparency, value and choice.’
A study from Greenwich Associates also finds that half of European institutional investors expect to have more than 50 percent of their assets linked to ESG criteria by 2024.
