As part of its far-reaching ESG rollout BlackRock is listing a bond ETF in the US that targets specifically 'green' bonds. The iShares Global Green Bond ETF (BGRN) will track the Bloomberg Barclays MSCI Global Green Bond Select (USD Hedged) Index, which measures the performance of global investment-grade green bonds issued to fund projects with direct environmental benefits, the prospectus says.
For those wondering: green bonds are bonds that exclusively fund "projects that promote climate or other environmental sustainability purposes," the prospectus says.
To fit in the index, MSCI picks bonds based on four criteria. The first is whether they fund one of six kinds of activity: alternative energy, energy efficiency, pollution prevention and control, sustainable water, green building, and climate adaption. The remaining three criteria are: the existence of processes for green project evaluation and selection; the existence of processes for management of proceeds; the existence of a commitment to ongoing reporting of the environmental impact. Both self-labeled green bonds and unlabeled bonds are evaluated using these criteria. Government bonds are eligible for inclusion.