BlackRock makes first move into sustainable bond ETFs

ETF keybordBlackRock’s latest exchange-traded fund (ETF) is to avoid buying bonds of controversial-weapons makers in what is the firm’s first sustainable bond ETF.

The Barclays MSCI Euro Corporate 0-3 year Sustainability ex-Controversial Weapons Index excludes debt from companies that are involved with weapons such as cluster bombs, land mines and chemical and biological weapons.

BlackRock, which manages $200 billion (€183 billion) of investments in environmental, social and governance (ESG) investments, says the iShares Euro Corporate Bond Sustainability Screened 0-3yr Ucits ETF is launched in response to growing demand for ESG investments.

Hannah Skeates, global head of sustainable investments at iShares, which is BlackRock’s ETF business, said: “This is our first move into sustainable bond ETFs. It complements our European-domiciled sustainable equity ETFs, which has amassed almost $500 million.”

Bonds in the index are short-term Euro-denominated investment grade securities issued by corporates with an ESG rating of BBB or above. Issuers are from across Europe, the Americas and Asia Pacific and subject to 37 different ESG critieria, such as carbon emissions.

This fund is physically replicating and has a total expense ratio of 0.25%.

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