BlackRock partnered with a $23 billion superannuation fund to develop an ESG-focused global bond index fund.
VicSuper has again partnered with the global fund manager, this time to develop a global bond index fund similar to the ESG Australian Bond Index Fund the two launched earlier this year.
Benchmarked to a customised Bloomberg Barclays MSCI Global Aggregate SRI Select ex-fossil fuels index, the iShares ESG Global Bond Index Fund is designed to allow investors to gain exposure to global fixed income securities while excluding issuers across eight core filters: tobacco, alcohol, gambling, military weapons, civilian firearms, nuclear power, adult entertainment and genetically modified organisms.
An additional full fossil fuel screen excludes companies with industry ties to fossil fuels, while sovereign and government-related issuers with an MSCI ESG government rating below BB are also out, "in an effort to extend ESG considerations beyond typical corporate risk," according to BlackRock.
VicSuper chief investment officer Andrew Howard said the super fund's members were taking action on their ESG-related concerns, and added VicSuper was pleased to again partner with BlackRock in the development and seeding of an ESG-focused investment option.
"We're proud to have been able to partner with BlackRock to develop and become the seed investor for its new ESG-focused Global Bond Fund and, in doing so, to extend to fixed interest the same exclusionary screens we apply to equities under the Socially Conscious investment option," Howard said.
BlackRock Australia head of fixed income Craig Vardy added the move demonstrated BlackRock's increased focus on sustainability "across the board, from investment processes to investment solutions".
"Sustainable investing is no longer a niche area and has been brought to the mainstream, because of increased access to more granular data, more sophisticated analysis, shifting societal understanding of sustainability and a growing awareness that ESG factors can be tied to a company's long-term growth potential," Vardy said.
"The iShares ESG Global Bond Index Fund adopts BlackRock's proven index-driven investment process, combined with research-driven credit analysis.
"It provides a sustainable investment solution for those seeking exposure to global fixed income securities, particularly in this current low-rate environment, at the same low fee as non-ESG fixed income passive solutions."