BlackRock announced that investment and insurance firm Scottish Widows has allocated £2 billion of its pension portfolios to BlackRock’s newly launched Authorised Contractual Scheme (ACS) Climate Transition World Equity Fund, becoming the first investor in the fund.
Maria Nazarova-Doyle, Head of Pension Investments at Scottish Widows, said:
“Offering customers more sustainable investment choices, and challenging companies in which we invest to behave more sustainably and responsibly, is a central part of our strategy. Our work with BlackRock to design this new fund, together with our significant investment, will help to engender positive change in the industry; incorporating environmental, social and governance risks into a portfolio can have a meaningful financial impact on performance.”
According to BlackRock, the Climate Transition fund utilizes a new data driven investment approach, designed to measure a company’s exposure to the risks and opportunities related to the transition to a low-carbon economy. BlackRock developed the new strategy in response to strong investor demand for innovative solutions that incorporate an assessment of climate change-related risks and opportunities. The fund seeks to invest in companies that are best prepared for the transition, and reducing investment in companies that are less equipped.
BlackRock stated that The Fund offers portfolio diversification by providing exposure to companies across sectors, regions, and business maturities, explaining that the transition to a low carbon economy won’t just affect oil and gas companies, but rather all sectors – including hospitality, transportation, and healthcare.
The Fund’s new Climate Transition investment approach has a framework that translates low carbon risks and opportunities into five pillars: energy production, clean technology, energy management, water management and waste management. To generate an investment signal, BlackRock will score each company’s management of the five pillars into a single Climate Transition (CT) assessment, relative to the peers in their sector. The Fund also incorporates a number of exclusions: controversial and nuclear weapons; civilian firearms producers and where revenues are >5%; UN Global Compact breaches; exposure to tar sands, thermal coal where revenues are >5%.
Sarah Melvin, Head of UK at BlackRock, said:
“The global shift to zero and low carbon energy sources is underway and is accelerating. The BlackRock Climate Transition World Equity Fund expands our range of sustainable investment solutions, adopting an innovative data driven research approach to sustainability and climate change, and aims to deliver long-term value to clients based on companies’ readiness to transition to a low carbon economy. This marks another milestone in BlackRock’s commitment to helping clients build sustainability into their portfolios.”