The world’s largest asset manager BlackRock has launched a new Asia-focused climate action fund in Singapore which has attracted over $426 million from investors so far, making it the city-state’s largest equity ETF so far.
The climate action ETF launched on the Singapore Exchange (SGX) is backed by a consortium of investors like British insurer Prudential, Singapore’s state-owned investor Temasek and insurer Singlife.
It is the third ETF offering by the US-based BlackRock, with about $9 trillion under management, that tracks MSCI Climate Action Indexes launched at the end of 2022, coming three months after launches in the US and Japan.
An ETF is a basket of assets or stocks that track a specific index. By holding multiple assets, it can give investors more diversification compared to investing in individual stocks.
According to BlackRock, the fund offers investors access to “best-in-class” companies across Asia Pacific that are committed to reducing carbon emissions. These are usually large companies that have been assessed to outperform their peers based on factors including approved science-based targets, management of climate risks and green business revenue.
The Singapore’s bourse said that SGX Group with BlackRock are taking the lead in helping investors reach their low carbon transition objectives with the listing of iShares MSCI Asia ex-Japan Climate Action ETF. SGX, with the support of BlackRock and MSCI, is harnessing the power of its extensive partner network to spearhead the creation and implementation of a comprehensive global ecosystem of climate-related market solutions.
The Indexes favour a bottom-up approach and select the top 50% of companies in each GICS sector based on the company’s carbon intensity and commitments such as science-based target setting, green revenues, or opportunities, together with its climate risk management.
With this ETF, investors who wish to incorporate low carbon transition objectives in their portfolios can access best-in-class companies in Asia ex-Japan who are committed to reducing carbon emissions. The fund is managed by BlackRock, the world’s largest asset manager, and anchored by Prudential, one of the largest asset owners in Asia and a member of the Net Zero Asset Owners Alliance.
SGX Group said that the shift towards renewable energy, sustainable infrastructure and technologies opens new avenues for growth and innovation.
“Within Asia, Singapore has consolidated its position as a sustainable finance hub, attracting a substantial influx of capital from investors seeking to align their financial activities with climate considerations. As such, climate action instruments such as this ETF can play a crucial role by directing funds towards companies and projects focused on climate transition,” the bourse said in a statement.
SGX’s Vital Role
Michael Syn, Senior Managing Director, and Head of Equities at SGX Group, said that the Group plays a vital role in galvanising stakeholders within the financial ecosystem to mobilise capital and develop solutions to effect real change in addressing climate change.
He continued: “With the market and investors signalling their readiness for it, we have been working in partnership with BlackRock and MSCI to create a new global ecosystem of climate-related instruments such as this ETF and the climate action derivatives that were launched earlier this year.”
“By providing these tools, we are supporting investors in building a diversified portfolio of climate-conscious assets, enabling them to do their part for the transition while benefiting from the potential financial upside,” Michael Syn added.
Peter Loehnert, APAC Head of iShares and Index Investments at BlackRock, said that Asia Pacific is the largest and fastest growing region for energy transition investment, offering transformational opportunities for investors with climate-focused objectives.
Investors globally are increasingly choosing iShares ETFs as ideal vehicles to align portfolio allocations and implement low-carbon transition goals. This new fund will provide them with an innovative, unique, and powerful building block to access companies in the region leading the transition.
“As the world’s largest provider of ETFs, our aim is to offer clients an unrivalled choice of products to help them achieve their investment goals, and we are pleased that our close partnership with SGX Group has helped bring the fund to Singapore, a state that has had an outsized impact in global climate leadership,” Loehnert added.
Gillian Tan, Assistant Managing Director (Development and International) and Chief Sustainability Officer at Monetary Authority of Singapore (MAS), said that the successful launch of the iShares MSCI Asia ex-Japan Climate Action ETF is the outcome of close collaboration between SGX Group, MSCI and BlackRock, and adds to the suite of innovative products in Singapore that supports transition and decarbonisation efforts in Asia.