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BlackRock €1.4bn corporate bond ETF fails to get shareholder approval for ESG switch

EEXF failed to get the required level of shareholder approval

Theo Andrew

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BlackRock has failed to get the required level of shareholder approval for a proposed switch to an ESG index on its €1.4bn corporate bond ETF.

Following an extraordinary general meeting (EGM) on 1 April, BlackRock said it failed to pass proposals that would have seen its iShares € Corp Bond ex-Financials UCITS ETF (EEXF) switch its index to one that incorporates ESG metrics after not enough shareholders were present at the meeting.

It means the shareholder vote will be recorded as “inconclusive” as the minimum number of shareholder votes required was not met.

ETF Stream understands the failure to get the required amount of votes was due to a processing error of the firm's sub-custodian in delivering the right voting forms to the shareholders.

It is understood the €1.4bn iShares € Corp Bond ex-Financials 1-5yr UCITS ETF (EUNS), lined up for an ESG index switch at the same time as EEXF, received shareholder approval.

It is the third ETF this year that BlackRock has been unable to get approval for an ESG index switch on as it continues to green-up its ETF range in Europe.

Two sector ETFs, the iShares MSCI World Consumer Staples Sector UCITS ETF (WCSS) and the iShares MSCI World Consumer Discretionary Sector UCITS ETF (WCDS), also failed to meet the voter threshold in February.

In a market note, BlackRock, said: “The company announces that the EGM failed to pass as a quorum was not able to be met. The EGM was in relation to a proposed change to the benchmark index of the fund and therefore the investment objective and policy of the fund.

“The fund will therefore not undergo these proposed changes. The company will take action in order to seek to understand the reasons behind the result of the EGM.”

The proposed changes would have seen EEXF go from tracking the Bloomberg Barclays Euro Corporate ex-Financials Bond index to the Bloomberg MSCI Euro Corporate ex Financials Sustainable SRI index.

EEXF would have gone from tracking 1998 securities to 1313 due to the additional ESG screens on the new index.

Despite these setbacks, the world’s largest asset manager has been able to get shareholder approval for many ETFs over the past six months including its €1.8bn iShares € Aggregate Bond UCITS ETF (SEAG).

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