BlackRock announced the launch of a new ESG bond fund, aimed at providing investors with broad-based exposure to global investment grade bonds, while aligning with ESG-related goals.
The fund was developed in consultation with investment and insurance firm Scottish Widows, which has signed on as its initial investor with a £500 million commitment.
The new BlackRock Global Corporate ESG Insights Bond Fund aims to deliver a similar level of risk and return as the Bloomberg Global Aggregate Corporate Index GBP Hedged, with additional sustainability attributes including a portfolio objective of a carbon emissions intensity score that is 50% less than the index. The fund will be managed by BlackRock’s Index Fixed Income portfolio management team.
The fund also uses ESG-related exclusionary screens to remove issuers involved in activities such as thermal coal and tar sands, tobacco, controversial weapons as well as violators of the UN Global Compact Principles.
Sarah Melvin, Head of UK at BlackRock, said:
“Increasingly, clients are looking for innovative investment solutions that incorporate climate change-related risks and opportunities. The launch of the BlackRock Global Corporate ESG Insights Bond Fund marks another milestone in our sustainable fixed income offering.”
The launch marks the second fund that BlackRock has built in consultation with Scottish Widows, following the introduction of the BlackRock Authorised Contractual Scheme (ACS) Climate Transition World Equity Fund in August 2020. Scottish Widows unveiled a series of climate targets for its £170 billion investment portfolio last year, including goals to halve the funds’ carbon footprint by 2030 and to reach net zero by 2050.
Maria Nazarova-Doyle, Head of Pension Investments and Responsible Investments at Scottish Widows, said:
“Working on the creation of these specially tailored funds to drive innovation in ESG investing, rather than just picking an existing solution, helps champion the development of more ambitious responsible investment strategies and products. In doing so we can help more capital flow into climate-aware investment strategies and contribute to pension schemes having greater choice when it comes to responsible investments.”