Increasing demand from investors to integrate climate considerations within investment portfolios is driving an evolution in sustainable investing. BlackRock is committed to providing clients with investment options to support the transition to a low-carbon economy and today announces that following MSCI’s Semi-Annual Index Review and effective from 1st December 2021.
The iShares ESG Enhanced UCITS ETF range will receive upgrades to its benchmarks, the MSCI ESG Enhanced Focus Indices, to meet the EU’s Climate Transition Benchmark (CTB) requirement as well as introduce more stringent exclusions, including conventional weapons.
The CTB is an internationally recognised benchmark introduced by the European Union in April 2020, following a consultation with market participants. The benchmark is aligned to a 1.5ºc warming trajectory and requires a 30% carbon intensity reduction versus the parent index and a 7% year-on-year decarbonisation of the benchmark itself. The carbon intensity requirements incorporate Scope 3 carbon emissions for the first time. The new business screens include conventional weapons and from the end of November 2022 the introduction of an environmental harm screen. There is also an upgrade of the current oil sands screen to an unconventional oil and gas screen.
As a result of these benchmark changes, all six funds within the range will have their SFDR classification changed to Article 9 on the 1st December 2021. In addition, the range will also comply with the requirements of the BVI, the German Investment Funds Association, a new industry standard for ESG products available for distribution in Germany.
“Investors can help support a successful response to climate change through their portfolio choices. These improvements to the iShares ESG Enhanced UCITS ETF range raise the standard for incorporating environmental characteristics into sustainable ETFs. For the first time, ESG and climate considerations, in line with EU regulation, are united into a range of ETFs offering a choice of exposures covering global equities.
“Our focus continues to be on aligning ESG ETFs with emerging standards in sustainable investing and offering clients more choice when seeking to implement their sustainability goals.”Manuela Sperandeo, BlackRock’s EMEA Head of Sustainable Indexing