Stockholm (NordSIP) – BlackRock launched six new sustainable equity ETFs and started providing access to ESG data reporting across its entire iShares range, according to a press release. The decision follows calls for the world’s largest asset manager to take a stronger environmental stance in its portfolio management at the start of 2019.
Last year Blackrock had already launched six ESG Screened ETFs. The six new equity iShares ESG Enhanced ETFs track decarbonised MSCI indices that re-weight securities to maximise ESG scores while remaining close to standard benchmarks. These benchmarks’ goal is to achieve a 30% reduction of GHG emissions relative to the parent index and screen out blacklisted companies. The indices exclude companies producing controversial and nuclear weapons, civilian firearms, tobacco, thermal coal and oil sands. Companies involved in “severe controversies” and those in violation of the United Nations Global Compact principles are also excluded, according to the press release.
“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 the long term risk-adjusted returns needed to fulfil their financial goals,” says Philipp Hildebrand, Vice Chairman, BlackRock.
The six ETFs are distinguished by their different regional focus and costs. The USA fund has fees of 0.1%. The Europe and EMU ETFs costs 0.15%, while the Japan ETF goes up to 0.2%. Finally, the EM and the World ETFs have fees of 0.2% and 0.23%, respectively.
“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,” commented Carolyn Weinberg, Global Head of iShares Product, at BlackRock.
According to a recent survey by Greenwich Associates, close to half of the European institutional investors polled expect to have more than 50% of their assets managed with ESG criteria within five years. 60% of institutional funds and insurance companies expressed similar expectations. Half of the investment managers polled and 44% of the study’s participants are already using ETFs as a primary vehicle for ESG exposures. According to Greenwich Associates, 73% of global investors not currently employing ESG strategies in their portfolios say they are considering or may soon consider doing so.
BlackRock expects European ESG ETF assets to grow to twenty times their present size to reach US$ 250 billion by 2028 or 60% of the US$ 400 billion in assets BlackRock believes ESG ETFs will gather globally.
“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,” concluded Stephen Cohen, Head of iShares EMEA at BlackRock.