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BlackRock launches two Paris-aligned climate equity ETFs

Track the Paris-Aligned Benchmark (PAB) which targets a 50% carbon intensity reduction and a 7% decarbonisation annual reduction

Tom Eckett

a person smiling for the camera

BlackRock has launched its first Paris-aligned climate change equity ETFs as the firm sees its ESG UCITS ETF range pass $50bn assets under management (AUM).

The iShares S&P 500 Paris Aligned UCITS ETF (UPAB) and the iShares MSCI World Paris Aligned UCITS ETF (WPAB) are listed on the London Stock Exchange with total expense ratios (TERs) of 0.10% and 0.20%, respectively.

The two ETFs track the S&P 500 Paris-Aligned Climate Sustainability Screened index and the MSCI World Climate Paris Aligned Benchmark Select index which are linked to the European Union’s Paris Aligned Benchmark (PAB).

The PAB is designed to align with a 1.5°C scenario that targets a carbon intensity reduction of at least 50% versus the parent universe and a minimum 7% decarbonisation yearly reduction.

The ETFs also exclude companies involved in oil and gas, thermal coal, controversial weapons, high carbon electricity generation and social norm violators.

The ETFs are categorised as Article 9 under the EU’s Sustainable Finance Disclosure Regulation (SFDR). BlackRock said it expects 70% of fund launches in Europe will qualify for either Article 8 – light green strategies – or Article 9 – dark green funds that look to reduce carbon emissions.

Manuela Sperandeo (pictured), EMEA head of sustainable indexing at BlackRock, commented: “As the low-carbon transition continues to transform market return expectations, we believe clients are best served by being at the forefront of that transition.

“This will require investors to embrace new strategies, and ETFs are playing a central role as foundational building blocks for people seeking out affordability, transparency, and convenience.”

Climate change ETFs: A year of dramatic development

The PAB and the other EU climate benchmark, the Climate Transition Benchmark (CTB), were created in November 2018 and have been the basis of a string of climate change ETF launches over the past year.

Lyxor was the first ETF issuer to launch ETFs in line with the EU’s benchmarks in March 2020 while Amundi, Deka, Franklin Templeton and Tabula also followed suit.

BlackRock’s first foray in the space came in October 2020 when it launched Europe’s first government bond climate ETF, the iShares € Govt Bond Climate UCITS ETF (SECD).

The world’s largest asset manager has also seen its ESG UCITS ETF range cross $50bn AUM following $10bn inflows in Q1.

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