BlackRock, a fiduciary to investors and provider of financial technology, has launched two active sustainable exchange-traded fund (ETFs) as the firm looks to leverage the global the transition to a low-carbon economy.
The two funds raised more than $1.5 billion, highlighting the increased focus on climate-aware strategies from global institutional investors.
Bermudian reinsurance group RenaissanceRe was one of the global institutions that invested in the funds, along with the California State Teachers’ Retirement System (CalSTRS), Temasek, Sura Asset Management, Varma Mutual Pension Insurance Company, Profuturo Group, and FM Global.
More than $1.2 billion flowed into LCTU making it the largest ETF launch of all time.
Additionally, approximately $500 million was invested in LCTD, making it one of the largest ETF launches in history.
The new ETFs seek to outperform their benchmarks over the long term by investing in companies that may be better positioned for the transition to the low-carbon economy.
To capitalise on the energy transition, BlackRock’s Sustainable Investing unit developed and managed a proprietary strategy with institutional investors since 2018.
The funds leverage a range of structured and unstructured data sources, advanced analytics and research-driven insights across the five pillars, including fossil fuels, clean technology, energy management, waste management in order to derive a unique low-carbon economy transition readiness score for each company.
Larry Fink, Chairman and CEO of BlackRock, commented: “The energy transition is central to all companies’ growth. Winners and losers will emerge in every sector based on each company’s ability to adapt, innovate and pivot their strategies toward the low-carbon economy.
“Many of our clients share this conviction and we are helping them be at the forefront of the energy transition through next generation climate analytics and sustainable strategies. We believe that this combination will lead to better outcomes for them and society as a whole.”
Kevin O’Donnell, President & CEO of RenaissanceRe said: “As a global reinsurer, we are uniquely aware of the long-term risks of climate change due to our central role in protecting communities from its impact. Investing in transition-ready companies furthers our leadership in risk management, while advancing the sustainability of our own investment portfolio.”