Dive Brief:
- BlackRock, the nation’s largest asset management firm, launched five “transition aware” funds this week. The new funds will promote ESG principles including reducing non-renewable natural resource utilization and pollution, carbon emissions and severe environmental and social related controversies, according to their descriptions.
- The funds will also avoid directly investing in companies who create “controversial weapons,” are involved in the production or sale of tobacco or have failed to comply with the United Nations 10 Global Compact Principles.
- BlackRock said the funds won’t have sustainable investing as their primary goal but “will have a minimum proportion of sustainable investments.” The passively managed funds are not going to be listed in the U.S. however, where the firm has become a favorite target of the anti-ESG movement.
Dive Insight:
The foreign climate-linked funds collectively have a global portfolio aligned to U.S., Japan and Europe-based companies, with one fund aligned to the European Economic and Monetary Union index and one global portfolio. The funds are listed on the Euronext Amsterdam exchange.
In order to consider an investment sustainable, the funds will have to invest in either activities that contribute to positive social and environmental impacts or companies with “one or more active carbon emissions reduction target(s) approved by the Science Based Targets initiative,” according to BlackRock.
“Sustainable investing and understanding of sustainability is evolving along with the data environment,” each of the funds’ summaries stated. “Industry participants, including index providers, face challenges in identifying a single metric or set of standardized metrics to provide a complete view on a company or an investment. ESG data sets are constantly changing and improving as disclosure standards, regulatory frameworks and industry practice evolve.”
The funds will follow the European Securities and Markets Authority rule requiring funds with an objective in the name must invest 80% of their assets in those causes. The rule is analogous to the Securities and Exchange Commission’s Names Rule.
The funds, all launched June 11, include:
- iShares MSCI World Climate Transition Aware UCITS ETF
- iShares MSCI Europe Climate Transition Aware UCITS ETF
- iShares MSCI EMU Climate Transition Aware UCITS ETF
- iShares MSCI US Climate Transition Aware UCITS ETF
- iShares MSCI Japan Climate Transition Aware UCITS ETF
On its U.S. homefront, BlackRock has eased on its ESG messaging, acknowledging in a securities filing earlier this year that mounting ESG scrutiny and regulations have the potential to affect the company’s revenues.
