Investment giant BlackRock announced today the launch of iShares MSCI Climate Transition Aware UCITS ETFs, a new suite of 5 exchange traded funds aimed at offering investors with exposure to companies leading in the transition to a low carbon economy.

According to BlackRock, the new funds are being launched following a survey of global institutional clients conducted by the firm last year indicating that most plan to increase their allocations to climate transition strategies over the next three years, with nearly half citing it as their top priority. Earlier this year in his annual letter to investors, BlackRock Chairman and CEO Larry Fink said that the firm views the global transition to low carbon energy sources as one of the most powerful drivers of capital market opportunity and risk, and described the energy transition as a “mega force.”

Manuela Sperandeo, BlackRock’s Europe and Middle East Head of iShares Product said:

“The transition to a low carbon economy is set to spur a significant reallocation of capital as energy systems and technologies continue to evolve and develop.  With the launch of the Climate Transition Aware range, we are expanding the choice we offer clients seeking to mitigate the investment risks and capture the opportunities from this transition.”

The new ETFs follow the MSCI Transition Aware Select Index methodology, which includes companies that meet at least one of a set of criteria, including having greenhouse gas (GHG) emissions targets approved by the Science Based Targets initiative (SBTi), deriving at least 20% of sales from green revenues, and scoring in the top 50% of companies in their sector on GHG emissions intensity while having a published emissions target.

The methodology also includes screens to exclude companies using the exclusion criteria of the EU Climate Transition Benchmarks, and screening out companies with ‘Very Severe’ MSCI ESG Controversies, and companies not in compliance with the UN Global Compact Principles, as well as companies involved in Controversial Weapons, Tobacco, Thermal Coal Mining, Thermal Coal Power Generation and Unconventional Oil & Gas Extraction, in addition to Energy, Materials, Industrials and Utilities companies with high emissions intensity and those without targets or reporting.

Sebastian Lieblich, Managing Director, Head of EMEA Index Products, MSCI said:

“Investors are increasingly looking for data and tools to help them adapt their strategies to better manage the challenges and opportunities stemming from the transition to a low-carbon economy. Clarity on the commitments of businesses to reduce their carbon footprint through published targets, as well as their revenues from green businesses are key in this process. The MSCI Transition Aware Select Indexes methodology can play a central role for investors looking to factor these parameters in their decision making.”

According to BlackRock, the new ETFs offer investors with tools to build portfolios with sector neutrality, while mitigating the risks and capturing the opportunities associated with the transition to a low carbon economy.

The new ETF lineup includes the iShares MSCI World Climate Transition Aware UCITS ETF, iShares MSCI Europe Climate Transition Aware UCITS ETF, iShares MSCI EMU Climate Transition Aware UCITS ETF, iShares MSCI US Climate Transition Aware UCITS ETF, and  iShares MSCI Japan Climate Transition Aware UCITS ETF.