Asset management giant BlackRock is promising to exclude tar sands/oil sands and thermal coal projects from of its fastest-growing sustainable investment funds.
In its announcement last week, BlackRock said customer demand for sustainable investment is booming, with assets more than doubling in one year and US$5 billion in financial flows in 2019. Now, “the firm’s market-leading exchange-traded fund (ETF) provider, iShares, is launching three new fossil fuel screened ETFs under a new ‘Advanced’ product range that will track indices with extensive screens, including for palm oil, controversial weapons, and for-profit prisons,” BusinessGreen reports, citing the company announcement. “Additional screens will exclude companies with thermal coal and oil sands revenue exposure.”
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The new rules take effect March 2.
“The move is part of a rebranding of iShare’s environmental, social and governance (ESG) ETFs,” BusinessGreen adds. “First launched in October 2018 as Sustainable Core ETFs, they will now be named Aware ETFs. They will continue to operate in the same fashion, tracking indices that include companies exhibiting favourable ESG characteristics.”
“Our clients’ growing preference for investing in top ESG companies is quickly driving an evolution in fund design and index construction,” said Managing Director Carolyn Weinberg, global head of product for iShares. “We are stepping forward with our proposed Advanced range, which will enable investors to aggressively pursue companies with strong ESG scores while also avoiding those with riskier ESG business involvement, including fossil fuel reserves or ties to thermal coal or oil sands.”
“Sustainable investing has reached an inflection point as investors better understand the increasing impact that ESG-related risks have on asset pricing, and account for these risks in their portfolios,” said Armando Senra, BlackRock’s head of Americas iShares. “That has translated into growing demand for iShares sustainable ETFs and the need to offer greater choice to make sustainability our standard for investing.”
Last month, BlackRock CEO Larry Fink’s influential annual letter to investors emphasized climate risk and fossil divestment, just days after the company announced it was joining the Climate Action 100+ corporate accountability campaign. But within a couple of weeks, Germany’s Urgewald coal phaseout campaign was warning that the announcement sidestepped the segments of the global coal industry that produce the most carbon dioxide emissions.