iShares Emerging Markets ESG Sector Leaders ETF brings in more than USD600m Ilmarinen investment
iShares ESG MSCI EM Leaders ETF (LDEM) has received more than USD600 million in investment from Ilmarinen, Finland’s largest pension insurance company.
This marks the second time Ilmarinen has reallocated assets toward iShares ESG-integrated strategies from traditional benchmarks.
Established in 1961, Ilmarinen has made sustainability an integral aspect of its overall company philosophy and investment strategy for decades. The firm is responsible for providing pension insurance for 1.2 million people and has about EUR50 billion in ESG-integrated investment assets.
“ESG has been a core component of our investment strategy for a long time. Until recently, however, implementing sustainable strategies in our indexed public equity portfolio has been difficult because many parts of the market lacked a suitable ESG-oriented benchmark,” says Anna Hyrske, head of responsible investing at Ilmarinen. “Advances in ESG data and analysis, indexing and portfolio construction have helped us achieve our sustainability goals and meet our performance objectives.”
LDEM seeks to track an index composed of more than 400 emerging market large- and mid-capitalisation high ESG performing companies relative to their sector peers1 in 26 countries.
Excluded from the index are companies involved in tobacco, alcohol, gambling, nuclear power, nuclear and conventional weapons, and controversial weapons as well as other controversial business involvement.
“Ilmarinen is pioneering an approach to re-orienting its entire portfolio toward more sustainable solutions,” says Salim Ramji, Global Head of iShares and Index Investing at BlackRock. “More and more clients globally have conviction about the impact of sustainability risks on their portfolios and are integrating ESG into their investment allocation decisions as a result.”
iShares previously worked with Ilmarinen to launch its iShares ESG MSCI USA Leaders ETF (SUSL), which launched in May 2019 with nearly USD850 million from the Finnish firm. SUSL is the largest equity ETF launch in the past 15 years, and has subsequently attracted another USD1 billion in investor flows, more than doubling the fund to USD1.9 billion in assets3. Across SUSL and LDEM, the Sector Leaders ESG ETF range has USD2.5 billion in assets.
“Assessing a portfolio’s environmental, social and governance characteristics through a risk lens is becoming standard for many investors,” says Carolyn Weinberg, Managing Director and Global Head of Product for iShares. “With over USD26B in assets invested in more than 80 ETFs globally, iShares is continually innovating to expand our range of ESG index strategies to help meet our clients’ investment objectives, from implementing screens to targeting high ESG-rated companies.”