BlackRock Goes Big on ESG with New ETF Offerings

With close to $7.5 trillion in assets under management in 2019, environmental, social and governance (ESG) couldn’t get a bigger backer than BlackRock. The global investment giant confirmed their commitment to ESG with the introduction of a new exchange-traded fund (ETF) offerings under its iShares brand.

Per a Yahoo! Finance article, the firm “pledged to double sustainable ETF offerings, push index providers to expand their environmental, social and governance benchmarks and drop thermal coal producers from BlackRock’s approximately $1.8 trillion in active strategies. Investor interest in value-based and sustainable strategies has surged amid protests against racism and a deadly outbreak that has infected more than 8.3 million people around the world.”

Here’s the new lineup of ETFs: the iShares ESG Aware Conservative Allocation ETF (EAOK); the iShares ESG Aware Moderate Allocation ETF (EAOM); the iShares ESG Aware Growth Allocation ETF (EAOR); and the iShares ESG Aware Aggressive Allocation ETF (EAOA). Each comes with a low 0.18% expense ratio.

“The significant acceleration of sustainable index investing has been driven by four forces: an acceptance that sustainable characteristics are consequential to returns, better data is leading to better indexes, sustainable ETFs are generally low cost, and an expanding universe of fund options are enabling investors to construct sustainable portfolios with ESG goals alongside traditional risk and reward objectives,” said Carolyn Weinberg, Managing Director and Global Head of Product for iShares, in a press release. “Our new funds launching today give investors new opportunities to efficiently access ESG investing. Our iShares ESG Aware Asset Allocation ETFs are designed to simplify the ESG investment process with single-ticker solutions.”

The ETF provider powerhouse was already hinting that it was ready to double down on ESG investing. BlackRock CEO Larry Fink said the company would begin implementing more ESG-tilted endeavors, including more sustainability screeners as well as heading for the exits on certain fossil fuel investments.

It’s hard to blame Fink’s latest move given the way ESG has performed during the first quarter, even when it was riddled with sell-offs from the pandemic in March.

“In the first quarter of 2020, we have observed better risk-adjusted performance across sustainable products globally, with 94% of a globally-representative selection of widely-analyzed sustainable indices outperforming their parent benchmarks,” BlackRock said in a 401k Specialist article.

Investors who want ESG exposure via an ETF wrapper can take a look at the Xtrackers MSCI EAFE ESG Leaders Equity ETF (EASG). EASG seeks investment results that correspond generally to the performance of the MSCI EAFE ESG Leaders Index.

The fund will invest at least 80% of its total assets (but typically far more) in component securities (including depositary receipts in respect of such securities) of the underlying index. The underlying index is a capitalization-weighted index that provides exposure to companies with high ESG performance relative to their sector peers.

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