BlackRock has launched four bond funds that incorporate sustainable investing criteria for emerging market companies where the gap between environmental laggards and leaders is said to be large.
The four funds integrate environmental, social and governance (ESG) factors and BlackRock describes the products as a significant step towards sustainable investment in emerging market debt.
The funds are actively managed against the JESG EMD indices – a set of indices across government, local authority and corporate bonds. JP Morgan in collaboration with BlackRock launched the indices in April this year.
Brian Deese, head of sustainable investing at BlackRock, said the firm was building tools for its portfolio managers to analyse sustainability information alongside traditional financial metrics.
BlackRock believes the ESG indices could prompt greater capital allocation to more ESG-friendly issuers over time, and Giulia Pellegrini, who is head of emerging market debt sustainable investing and a portfolio manager at BlackRock, said: “The gap between ESG leaders and laggards is large in the EM world, and a strong ESG data can provide forward-looking information that captures the underlying deterioration of an issuer’s creditworthiness, sometimes well before standard macro credit metrics.”
The funds are: BGF ESG Emerging Markets Bond Fund; BGF ESG Emerging Markets Local Currency Bond Fund; BGF ESG Emerging Markets Corporate Bond Fund; and BGF ESG Emerging Markets Blended Bond Fund.
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