Depth and scope of ESG products continues to expand
Blackrock, the largest asset manager in the world, is expanding its European ESG funds range.
A new global equity ETF, the iShares MSCI World SRI UCITS ETF, delivers exposure to stock markets with a focus on companies with the strongest Environmental, Social and Governance (ESG) ratings according to MSCI. The ratings assess how companies are exposed to and manage idiosyncratic risks such as strikes, factory shutdowns and lawsuits. The analysis also covers broader industry issues that can create both significant risks and opportunities, such as regulation and weather patterns. The MSCI World SRI Select index, which the new fund tracks, excludes companies involved in severe controversies or in military weapons, civilian firearms, tobacco, alcohol, nuclear power, gambling, adult entertainment and genetically modified organisms.
Blackrock says it is ‘consistently’ hearing from clients that they are looking more closely at improving the ESG and carbon profile of their investments, which they acknowledge helps manage risk in their portfolios. The firm says it has seen a substantial increase in demand from investors to incorporate values and ESG principles into their investment processes. It has more than $62 billion globally in assets benchmarked to MSCI ESG indexes.
The launch is interesting in that it again counters the charge that investors are not interested in an ESG approach to their portfolios. They clearly are, especially younger generation clients. Secondly, it underlines that an ESG approach is not limited to active, specialist managers. There is sustained demand and scope for low cost, indexed products which serves to deepen the sector and improve understanding of it, without detracting from the most innovative, ground-breaking active investors.
Fortuna AMC has specialist expertise in assessing Environmental, Social and Governance (ESG) issues affecting investors, and how to address and communicate the risks and opportunities they present. If you would like to know more, please contact Caroline@fortunaamc.co.uk