BlackRock has unveiled a new set of sustainable ETFs, ESG data disclosures, model portfolios and portfolio analytics, designed, the firm writes, to deliver a simplified sustainable investment experience to the growing number of investors seeking to align their values with their long-term financial objectives.
BlackRock launched its Core ETF series in Europe four years ago, designed to help long-term investors construct smarter, better value portfolios. The firm says that these six new Sustainable Core ETFs build on the success of this range in establishing a new standard of investment access, and complement iShares’ existing 15-strong range of ESG UCITS ETFs.
Philipp Hildebrand, Vice Chairman of BlackRock, says: “It is clear that there is a growing movement of investors who want to align their investment decisions with their values and beliefs. Increased transparency on the sustainability profile of their investment portfolios will enable investors to understand the potential ESG-related risks and opportunities they are exposed to. Strong ESG performers are more resilient and this has led to an irreversible move from an era of asking ‘why?’ to ‘why not?’ in sustainable investing.”
The Sustainable Core suite consists of six new ESG ETF funds that track MSCI indices that screen out controversial weapons, nuclear weapons, civilian firearms, tobacco, companies implicated in the violation of the United Nations Global Compact principles, thermal coal and oil sands. Investors looking to avoid exposure to these business activities now have an even broader set of simple, accessible tools, at the same price point as Core building blocks, the firm says.
Stephen Cohen (pictured), Head of iShares EMEA at BlackRock, says: “A greater focus on value for money and the availability of better technology and tools is empowering European investors to evolve how they build portfolios to achieve intended outcomes. With the iShares Sustainable Core suite, sustainable investing is now as easy as ‘traditional’ investing. Just as iShares Core ETFs have dramatically simplified the investor experience, we believe this complementary range will play a key role in bringing sustainable investing to the heart of investor portfolios.”
Baer Pettit, President at MSCI, says: “We are observing a growing demand amongst asset owners and wealth managers for exclusions based on environmental, social and governance criteria that will enable them to efficiently manage their investment portfolios. This launch underpins MSCI’s commitment to monitor the evolving ESG landscape and to provide innovative indexes that are designed to help investors address their needs as trends develop. In this instance, MSCI has created an off-the-shelf index with ESG screens that is easy for our clients to use and implement.”
BlackRock has also focused on new ESG evaluation tools, writing that technology is also making it possible to break out of the ‘either/or’ model of sustainable investing with new enhancements in ESG data, portfolio construction and risk evaluation tools.
BlackRock says that transparent ESG data on iShares.com will create greater transparency for investors on ESG product metrics, carbon intensity and business involvement, starting today with 30 ETFs spanning the Sustainable Core range and the existing equivalent iShares Core products and extended to the full iShares range over the coming year. This is part of a firm-wide initiative to expand access to ESG data and sustainability-related insights for clients and across our investment processes globally, BlackRock writes.
BlackRock is also launching five strategic ESG model portfolios for financial advisers and independent asset managers in a range of risk profiles and implemented through UCITS iShares ETFs. BlackRock’s Aladdin also provides portfolio-level ESG analysis and reporting that helps investors better understand risks and opportunities, by monitoring ESG scores and tangible metrics to determine their impact on overall portfolio returns.
BlackRock expects that ESG ETFs assets under management will rise dramatically in the next decade driven by increased interest from retail investors as well as continued strong demand from institutions. According to BlackRock projections, ESG ETF fund assets are expected to grow from USD25 billion today to more than USD400 billion by 2028. The rapid growth in ESG ETFs will increase the ETF share of total ESG ETF and mutual fund assets from 3 per cent today to 21 per cent by 2028.
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