BlackRock has launched six new sustainable equity exchange traded funds, and is now also providing access to environmental social and governance (ESG) data reporting across its entire iShares range.
Philipp Hildebrand, Vice Chairman, BlackRock says: “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 also generating long term risk-adjusted returns needed to fulfil their financial goals.”
A recent Greenwich Associates study shows that about half of the European institutional investors polled – and almost 60 per cent of institutional funds and insurance companies – expect to have more than 50 per cent of their assets managed with ESG criteria within five years. Forty-four per cent of the study’s participants, and half of the investment managers polled, are using ETFs as a primary vehicle for ESG exposures.
BlackRock predicts European ESG ETF assets to grow 20x to USD250 billion by 2028, up from USD12 billion today. This presents 60 per cent of the USD400 billion in assets BlackRock believes ESG ETFs will gather globally.
Carolyn Weinberg, Global Head of iShares Product, at BlackRock, says: “Sustainable investing means different things to different investors. Some want to simply avoid exposure to certain types of companies, while others are looking to advance specific sustainable outcomes. Our Sustainable Core ETF range is about setting a global catalyst for choice and transparency that allows investors to apply ESG considerations into the foundation of their portfolios. With these new funds, iShares has established the industry’s most comprehensive family of funds, accounting for the variety in investment objectives and preferences that our clients have expressed.”
Building on the launch of six ESG Screened ETFs last year, the new equity iShares ESG Enhanced ETFs are designed for investors who are proactively looking to improve their portfolios’ ESG scores and reduce carbon and other Green House Gas (GHG) intensity, while maintaining a target tracking error to the world’s most recognised benchmarks.
The six funds track MSCI indices that re-weight securities to maximise ESG scores while remaining close to standard benchmarks. They are optimised to reduce carbon and GHG emissions intensity by 30 per cent relative to the parent index and screen out companies with exposure to controversial and nuclear weapons, civilian firearms, tobacco, thermal coal and oil sands as well as those implicated in very severe controversies and those in violation of the United Nations Global Compact principles.
Stephen Cohen, Head of iShares EMEA at BlackRock, says: “The way portfolios are built in Europe is undergoing an upheaval, with investors demanding more when it comes to transparency, value and choice. As many investors reflect on the ESG characteristics of their portfolios, we will continue to look for ways to make the expression of sustainability preferences easy and cost-efficient, while providing the tools that shine a light on the ESG profile of the ETFs in which they invest.”