BlackRock and Scottish Widows have collaborated to design the Climate Transition World Equity fund, a new portfolio dedicated to helping the transition to a low carbon economy.
The BlackRock fund, created by the two firms, has received £2bn from Scottish Widows’ pension portfolios as it looks to offer customers “more sustainable investment choices”.
Climate transition is a new data driven investment approach developed by BlackRock that measures a company’s exposure to transition risks and opportunities, seeking to provide investors the chance to invest in the transition to a low carbon economy.
BlackRock said the strategy reflected investors’ growing demand for solutions that tackled climate change.
The fund is available to financial advisers and their clients.
Sarah Melvin, head of UK at BlackRock, said: “The global shift to zero and low carbon energy sources is underway and is accelerating.
“The BlackRock Climate Transition World Equity fund expands our range of sustainable investment solutions, adopting an innovative data driven research approach to sustainability and climate change, and aims to deliver long-term value to clients based on companies’ readiness to transition to a low carbon economy.”
The fund looks to increase investment in companies well prepared for the technological innovation, regulation and extreme weather that comes with a climate transition, and reduce exposure to those less equipped.
The investment team will look at energy production, clean technology, energy management, water management and waste management, scoring the company on its management of each of the five pillars.
A systematic approach is then used to deliver the scoring methodology, which in turn manages the portfolio’s weightings.
Portfolio diversification is achieved by investing in companies across sectors, regions, and business maturities.
BlackRock said this allowed the portfolio team to manage risk constraints, while maintaining cost-effectiveness for investors.
Maria Nazarova-Doyle, head of pension investments at Scottish Widows, said: “Offering customers more sustainable investment choices, and challenging companies in which we invest to behave more sustainably and responsibly, is a central part of our strategy.”
The fund will be managed by Jonathan Adams who will draw research insights from BlackRock Sustainable Investing team.
imogen.tew@ft.com
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