BlackRock Bets Big on ESG Investing
The world's largest asset manager has introduced a core ESG ETF portfolio, new ESG funds and more extensive disclosures on ESG metrics.
BlackRock is making a bigger bet on environmental, social and governance investing.
The world’s largest asset manager has bundled six existing ESG ETFs plus a new bond ESG ETF into a core portfolio lineup, called iShares Sustainable Core, and it has introduced an ESG Portfolio Analyzer that advisors can use to score entire portfolios for their environmental, social and governance metrics.
In addition, it has launched six new ESG funds in Europe, known as UCITS, and its iShares website now discloses ESG and carbon intensity metrics alongside existing portfolio characteristics for all its ESG ETFs, which number a dozen in the U.S. BlackRock expects to expand disclosure of those metrics to all its iShares ETFs by early next year.
The ESG metrics include several MSCI measures — its ESG Quality Score, ESG percentage of coverage and Weighted Average Carbon Intensity — plus the MSCI Lipper Peer Group percentile ranking.
“Sustainable investing is becoming mainstream investing,” said Brian Deese, global head of sustainable investing at BlackRock, in a statement.
BlackRock, also the world’s biggest ETF provider, expects the demand for sustainable investing will continue to grow dramatically as investors choose to align their holdings with their values. It projects that ESG ETF assets, now totaling about $25 billion, will grow to $400 billion by 2028.
The asset manager does not believe sustainable investing reduces investor returns. On the contrary, “a growing body of research underscores that strong ESG performers are more resilient and investing in them allows investors to align their values and beliefs without sacrificing return,” Deese said.
The iShares Sustainable Core ESG ETFs include:
- iShares ESG U.S. Aggregate Bond ETF (EAGG)
- iShares ESG 1-5 Year USD Corporate Bond ETF (SUSB)
- iShares ESG USD Corporate Bond ETF (SUSC)
- iShares ESG MSCI USA ETF (ESGU)
- iShares ESG MSCI USA Small-Cap ETF (ESML)
- iShares ESG MSCI EAFE ETF (ESGD)
- iShares ESG MSCI EM ETF (ESGE)
Only the U.S. Aggregate Bond ETF is new. Expense ratios for the seven core ESG funds range from a low of 10 basis points for EAGG (until June 30, 2024, due to fee waiver) to 25 basis points for ESGE. MSCI. BlackRock had $6.44 trillion in assets under management as of Sept. 30.