BlackRock has this week launched a fund designed to simplify environmental, social, and governance (ESG) investing through a focus on factors that demonstrate materiality for investors.
The Authorised Contractual Scheme (ACS) World ESG Insights Equity Fund is underpinned by BlackRock's existing ESG framework, designed to overweight companies it believes may benefit from capturing ESG risks while also aiming for a 50 per cent reduction in carbon intensity compared to the FTSE Developed Index.
The ESG framework also aggregates data from multiple sources into 15 proprietary sustainable descriptors that encompass ESG issues. The descriptors are mapped against a sector-specific materiality matrix BlackRock said is then used to produce a score for each company "in order to maximise the portfolio's ESG profile".
The 15 descriptors are captured in the separate themes of the 'E'- a company's exposure and management of risks and opportunities associated with the transition to a low carbon economy, the 'S' - issues reflecting how corporations work with their internal and external workforce and stakeholders, and the 'G' - focus on good corporate governance structures and behaviours.
BlackRock said the fund will also incur regular reporting including ESG and carbon metrics aligned to the UN's Sustainable Development Goals and the aims of the Paris Agreement.
"Pension schemes, insurers and wealth platforms are asking for our help to realise this historic investment opportunity," said head of UK Sarah Melvin.
"This launch marks another milestone in our sustainability offering to help savers build their pension and long-term investments in companies with a positive ESG profile."
Jonathan Adams and Andrew Bertolotti will manage the ACS World ESG Insights Equity Fund.
BlackRock head of EMEA and Asia Pacific sustainable investment solutions Tom Fekete said findings from its 2020 Sustainable Investing Survey had indicated investors were held back to increasing their exposure to sustainable investments.
"This fund helps to bridge that gap by offering investors access to BlackRock's proprietary ESG views and risk management to better position their core allocations against sustainable risks and opportunities," he said.
"Sustainability is a key component of the way BlackRock constructs portfolios and designs products."
The launch of the fund companies after BlackRock confirmed its flagship defined contribution default fund LifePath will target 50 per cent ESG strategy investment by mid-2021.
More recently, the asset manager also launched a suite of three ESG multi-asset exchange-traded funds to provide investors with a "cost-efficient, transparent and sustainable way" to invest during times of market uncertainty.
This story first appeared on our sister title Professional Pensions