New BlackRock Global Corporate ESG Insights Bond fund sees £500m investment from Scottish Widows Multi-Asset funds

by | Oct 11, 2022

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BlackRock has announced today that Scottish Widows has become the first investor in its newly launched BlackRock Global Corporate ESG Insights Bond Fund. The UK retirement savings provider is initially allocating £500 million in some of its multi-asset funds, including those used in its flagship workplace defined contribution default solution, into BlackRock’s new Fund.

This is the second fund which BlackRock has built in consultation with Scottish Widows. It follows the BlackRock Authorised Contractual Scheme (ACS) Climate Transition World Equity Fund that launched in August 2020.

The BlackRock Global Corporate ESG Insights Bond Fund seeks to provide broad-based exposure to global investment grade bonds, whilst seeking to achieve certain ESG related aims.

The Fund is managed by BlackRock’s Index Fixed Income portfolio management team and aims to deliver a broadly similar level of risk and return as the Bloomberg Global Aggregate Corporate Index GBP Hedged. Its portfolio objectives target a carbon emissions intensity score that is 50% less than the index.

The strategy uses a set of exclusionary screens to remove certain issuers from the investment universe. These exclude companies involved in activities relating to thermal coal and tar sands; tobacco; violators of the UN Global Compact Principles; and controversial weapons, as well as companies connected with nuclear weapons or involved in the production of civilian firearms.

The corporate issuers left in the investment universe are then assessed using the BlackRock Sustainable Investing Intelligence (BSI Intel) framework, using a variety of ESG datasets generated by BlackRock and external research providers to evaluate and score corporate issuers.

BlackRock combines these various ESG datasets for corporate issuers to create one overall ESG score – the ‘BSI Intel Insight’ – for each corporate issuer. The resulting portfolio is comprised of higher scoring ESG issuers, relative to other corporate issuers in the same or similar industries, whilst seeking to maintain a risk and return profile broadly similar to that of the index.

According to Blackrock, they believe that this strategy reflects growing demand from UK retirement savings providers, wealth managers and private banks for innovative solutions that incorporate climate change-related risks and opportunities as well as the nuances of ESG integration that are unique to bonds.

Sarah Melvin, Head of UK at BlackRock, noted: “Increasingly, clients are looking for innovative investment solutions that incorporate climate change-related risks and opportunities. The launch of the BlackRock Global Corporate ESG Insights Bond Fund marks another milestone in our sustainable fixed income offering. The strategy reflects the growing demand from UK defined contribution providers seeking to help members incorporate bespoke ESG considerations into their retirement savings, drawing on the increasing sophistication of ESG data and portfolio construction capabilities.”

Maria Nazarova-Doyle, Head of Pension Investments and Responsible Investments at Scottish Widows, said: “Working on the creation of these specially tailored funds to drive innovation in ESG investing, rather than just picking an existing solution, helps champion the development of more ambitious responsible investment strategies and products. In doing so we can help more capital flow into climate-aware investment strategies and contribute to pension schemes having greater choice when it comes to responsible investments.”

[1] Source: Scottish Widows, as at 30th April 2022

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