BlackRock Adds Low-Carbon Filter to Some European Funds

The move will put the funds into the "Article 8" category under the European Union's Sustainable Finance Disclosure Regulation.

BlackRock is set to change the names and underlying indexes of its consumer-staples and consumer-discretionary sector ETFs to incorporate low-carbon criteria.

Effective Dec. 1, the iShares MSCI World Consumer Staples Sector UCITS ETF (IUCS) and iShares MSCI World Consumer Discretionary Sector UCITS ETF will be renamed the iShares MSCI World Consumer Staples Sector ESG UCITS ETF and iShares MSCI World Consumer Discretionary Sector ESG UCITS ETF, respectively.

IUCS will start tracking the MSCI World Consumer Staples ESG Reduced Carbon Select 20 35 Capped index, which will see its constituent count fall from 116 to 105.

IUCD, meanwhile, will track the MSCI World Consumer Discretionary ESG Reduced Carbon Select 20 35 Capped index, with its constituent count falling from 163 to 157.

The low-carbon sector benchmarks capture large- and mid-cap stocks across three developed markets while providing a relative 20% uptick in ESG, or environmental, social and governance, scoring and 30% reduced greenhouse gas exposure versus parent indexes.

Indexes’ Exclusions

The indexes also exclude companies involved in controversial weapons, nuclear weapons, civilian firearms, tobacco, thermal coal, oil sands, conventional weapons and companies that are classified as violating United Nations Global Compact principles.

The largest constituent in each benchmark is capped at 35%, with all other companies capped at 20%. These thresholds drop by 10% at each index rebalancing.

BlackRock said IUCS and IUCD will bear portfolio restructuring costs of 0.07% and 0.05%, respectively, but their fees will remain unchanged following the overhaul.

The ETFs will now be categorized as Article 8 under the European Union's Sustainable Finance Disclosure Regulation.

This marks BlackRock’s latest reshuffle of its ETF range under the sustainable disclosure framework after it upgraded the iShares $ Development Bank Bonds UCITS ETF (DDBB) to Article 9 last month.