Passive funds giant BlackRock has launched six new sustainable exchange-traded funds (ETF) that aim to improve environmental, social and governance (ESG) scores and reduce carbon and greenhouse gas emissions by up to 30%.
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 world’s largest asset manager said in a statement.
The funds will also screen out companies that have exposure to nuclear weapons, civilian firearms, tobacco, thermal coal and oil sands in addition to those “implicated in very severe controversies and those in violation of the United Nations Global Compact Principles” – the world’s largest corporate sustainability drive.
The fund names and total expense ratios are as follows:
- iShares MSCI USA ESG Enhanced Ucits ETF (0.10%)
- iShares MSCI Europe ESG Enhanced Ucits ETF (0.15%)
- iShares MSCI EMU ESG Enhanced Ucits ETF (0.15%)
- iShares MSCI World ESG Enhanced Ucits ETF (0.20%)
- iShares MSCI Japan ESG Enhanced Ucits ETF (0.20%)
- iShares MSCI EM ESG Enhanced Ucits ETF (0.23%)
As ESG factors become an increasingly integral part of the investment process, the products are part of a push to make sustainable investing mainstream, BlackRock claims.
Indeed, a study by Greenwich Associates of 127 institutional ETF investors found that almost half expect to have more than 50% of their total assets managed with ESG criteria within the next five years.
“Europe is at the forefront of the sustainable investment movement,” said Philipp Hildebrand, vice chairman, BlackRock.
“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,” he added.
According to BlackRock estimates, growth in European ESG ETF assets will explode from $12 billion (€10.6 billion) to $250 billion by 2028.
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