BlackRock Unveils Climate Funds Targeting the Toughest ESG Clients Yahoo FinanceBlackRock Unveils Climate Funds Targeting the Toughest ESG Clients Yahoo FinanceBlackRock Unveils Climate Funds Targeting the Toughest ESG Clients Yahoo Finance
Impact Investing Forum 2023
London. May 04-05, 2023.
(Bloomberg). — BlackRock Inc. has launched two funds to meet the highest standards of sustainability in Europe. This is an attempt to attract investors who are looking for the best products on the market.
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The world’s largest asset manager announced that its new global Climate Action Multi-Asset Fund (and Climate Action Equity Fund) will be labeled with the Article 9 label. This is a category in Europe’s ESG investing rulesbook that places sustainability first. These products make up a small percentage of ESG funds. However, they are expected to increase in importance as more investors attempt to protect themselves from greenwashing. Last year, the Sustainable Finance Disclosure Regulation was implemented in Europe to combat greenwashing. According to Morningstar Inc., ESG funds in Europe saw a more than 25% increase in third quarter inflows. This is despite the fact that ESG products are not delivering sufficient emissions reductions to meet the 1.5 Celsius increase in temperatures required to avoid a global catastrophe. According to MSCI ESG Research only 11% of Article 9 climate funds are aligned with a temperature rise of no more than 2.5 degrees Celsius, with some as high a 4.5 degrees. This is a dismaying development that has triggered investor backlash. It also stated that it plans to include a year-on–year decarbonization rate. BlackRock stated that the BGF Climate Action Equity fund will seek to identify companies that are “long-term, disruptive structural winner” in reducing greenhouse gas emissions. Other Wall Street firms are also looking into Article 9 funds to attract ESG clients. JPMorgan Chase & Co.’s asset management arm announced last month that it was launching a fund that meets the criteria. The EU’s ESG disclosure rules require asset managers to split funds into three main categories. Article 8 is for products that support sustainable goals (often referred to as light green). Article 9 is for products that rank sustainability higher than financial returns. Article 6, for products that do not have ESG characteristics or targets. However, managers must still disclose ESG risk information if they are to be used by the asset management industry to measure product performance and design new investments. According to As You Sow, ESG funds are like trying to navigate the “wild west” because regulations and enforcement have been inconsistent. The shareholder advocacy group examined nearly 100 ESG funds and found that two-thirds of them failed to adhere to the principles.
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