Today BlackRock followed up its October launch of the iShares ESG U.S. Aggregate Bond ETF (EAGG) with the rollout of it first green bond ETF. The iShares Global Green Bond ETF (BGRN) targets fixed-income securities specifically linked to projects designed to alleviate climate change or support environmental sustainability goals.
BGRN comes with an expense ratio of 0.20% after the application of a waiver and lists on the Nasdaq stock exchange.
The underlying index methodology requires components be evaluated by MSCI ESG Research to ensure they meet the firm’s four green bond principles that focus on the use of the proceeds and on reporting standards. The prospectus notes that eligible bonds do not need to be labeled as green bonds as long as they meet the MSCI criteria and provide an appropriate level of transparency regarding the use of their proceeds.
The index can include sovereign debt, government-related debt, and corporate and securitized bonds denominated in the currencies of developed and emerging market issuers. As of the end of September, the index covered 28 countries, including the U.S., the document says.
It notes that certain types of fixed income are excluded from the index, including convertibles and preferred securities, as well as similar securities; inflation-linked debt; most municipal bonds; and floating-rate securities, among other types of debt. The index also includes a currency hedging element to minimize currency fluctuations.
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