The transition will require investors to embrace new strategies, and ETFs are playing a central role as foundational building blocks for people seeking out affordability, transparency, and convenience. Manuela Sperandeo, BlackRock’s EMEA Head of Sustainable Indexing, says : ‘As global investors increasingly seek to align with the transition to a low-carbon economy, there is also a need for independent, reliable and transparent benchmarks to measure the performance of companies that seek to meet or exceed the minimum standards of the Paris Agreement. The dual purposed features of both meeting Paris Aligned Benchmark regulatory standards and ESG integration make the ETF very interesting for our credit portfolio.’ We appreciate the combination of a strong Bloomberg MSCI methodology and BlackRock’s Fixed Income and Sustainable investing expertise. BlackRock’s Fixed Income expertise also helped to shape other elements of index design, including a thoughtful calibration of risk and turnover limits to deliver a scalable and cost-effective outcome.Īnn Brännback, Senior Portfolio Manager at Varma says: ‘This launch helps us in our continued efforts to achieve a carbon-neutral portfolio by 2035, which is one of Varma’s key sustainability targets. Their re-weighting approach delivers a consistent treatment of issuers across multiple bonds outstanding.
The firm writes that the index builds upon long-standing collaboration with Bloomberg and MSCI, through which BlackRock delivers critical innovation to achieve PAB decarbonisation solutions tailored to Fixed Income Index investing. The index also reduces both the absolute and intensity emissions versus parent by reweighting based on issuers. The Bloomberg MSCI methodology goes beyond the Paris Aligned Benchmark regulation by applying additional ethical screens and removing the lowest rated ESG issuers. The index tilt issuer weights to maintain diversification while achieving the Paris Aligned benchmark regulatory standards as well as improving the overall ESG profile. The firm writes that this fund will track a newly designed Bloomberg MSCI index which offers investors a differentiated, fixed income specific methodology. The iShares € Corp Bond ESG Paris-Aligned Climate UCITS ETF are designed to mitigate exposure to transition and physical climate risks, capture opportunities arising from the transition to a lower-carbon economy and screen out exposure to businesses involved in activities such as oil and gas, thermal coal, controversial weapons, high carbon electricity generation and social norm violators.