The world’s largest asset manager has overhauled a number of its exchange-traded funds (ETFs) with the aim of turning them into the largest climate-aligned range of such products.
BlackRock’s iShares ESG Enhanced UCITS ETFs have more than $9 billion in assets under management between them.
The main change announced by BlackRock today (October 26) involves updates to the ETFs’ benchmarks, MSCI’s ESG Enhanced Focus indices. The benchmarks have been adjusted to meet the new requirements of the European Union’s Climate Transition Benchmark rulebook, which dictates how indices should be structured to align with the goal of keeping global warming to less than an average of 1.5 degrees Celsius above pre-industrial levels.
The EU’s rules also require indices to reduce greenhouse gases by at least 30% relative to a traditional market index, and data should include scope 3 carbon emissions where possible. Scope 3 refers to a company’s indirect upstream or downstream carbon emissions.
Manuela Sperandeo, BlackRock’s EMEA head of sustainable indexing, said the changes “raise the standard for incorporating environmental characteristics into sustainable ETFs”.
Elsewhere, specialist sustainability investment manager Ecofin has a Global Energy Transition Fund to support investors seeking to allocate to new and renewable forms of energy production.
The US-based fund, trading under the ticker EETIX, invests in companies that derive at least half of their profits, revenues or assets from investment themes such as electrification, clean transport, building efficiencies, and other activities related to decarbonization.
Matt Breidert, portfolio manager, said: “Companies at the sharp end of innovation and developing strategies that enable sustainability goals to be accomplished are growing and we expect their shares to be rewarding for investors…
“The impact of addressing sustainable issues, such as climate change, has become a compelling investment case and, just as important, not factoring these issues represents an investment risk.”
Meanwhile, IndexIQ has launched a trio of ESG-themed ETFs on the New York Stock Exchange. The products target companies associated with gender equality, clean transport, and ocean biodiversity.
The IQ Engender Equality ETF (EQUL) has been developed in partnership with gender equality data provider Equileap. Companies in the portfolio must have demonstrated a commitment to gender equality. In addition, the fund will finance contributions will be made to the nonprofit organization Girls Who Code.
The IQ Cleaner Transport ETF (CLNR) has been established with the assistance of the US’s National Wildlife Federation. The fund invests in companies developing cleaner forms of transport such as electric vehicles, as well as multi-passenger transportation.
The IQ Clean Oceans ETF (OCEN) invests in companies that support or protect ocean environments through lowering pollution and increasing the efficiency of resources. The fund was developed in partnership with international advocacy group Oceana.