Investment giant BlackRock announced the launch of two ESG-focused fixed income exchange traded funds, including its first green bond fund, and an industry-first world government bond climate fund.
The iShares € Green Bond UCITS ETF (GRON) and iShares Global Govt Bond Climate UCITS ETF (CGGD) are listed on the Xetra and Euronext exchanges, respectively. GRON is categorized as Article 9 under the European Union’s Sustainable Finance Disclosure Regulation (SFDR), and CGGD is Article 8. According to BlackRock, the launches support its expectation that 70% of its fund launches and repositionings in Europe will be Article 8 or 9.
The iShares € Green Bond UCITS ETF aims to provide investors with exposure to investment grade bonds where the use of proceeds are directly tied to the promotion of climate or other environmental sustainability purposes. The fund seeks to track the Bloomberg Barclays MSCI Euro Green Bond SRI including Nuclear Power Index, which uses a research-driven methodology to evaluate index-eligible green bonds to ensure they adhere to established Green Bond Principles and to classify bonds by their environmental use of proceeds, while screening out securities involved in certain business activities such as controversial weapons and nuclear weapons as well as those associated with major ESG controversies.
BlackRock noted that one of the key benefits of the green bond fund is the transparency provided to investors via impact reporting. BlackRock will publish proprietary portfolio impact reports on the environmental benefit of the underlying holdings.
The iShares Global Govt Bond Climate UCITS ETF offers investors exposure to global, investment grade government bonds with a focus on climate considerations. CGGD tracks the FTSE Advanced Climate Risk Adjusted World Government Bond Index, providing access to global government bonds with a tilt towards countries less exposed to climate change risks and away from countries that are more exposed to these risks. Country weights in the index are adjusted based on a forward-looking assessment of climate risk faced by sovereigns according to the three pillars of physical risk, transition risk and resiliency to climate change.
Brett Olson, Head of Fixed Income iShares in EMEA for BlackRock said:
“We are committed to helping investors build sustainable portfolios that align with their specific goals. The AUM of our iShares EMEA fixed income range has grown by around 29% in the past year, as investors are increasingly using them as transparent, efficient building blocks to access the bond market sustainably.”