BlackRock has introduced an iShares ETF tracking the EURO STOXX 50® ESG, the Eurozone’s sustainability benchmark. The fund was listed on the Frankfurt Stock Exchange last July.
The EURO STOXX 50 ESG index reflects the benchmark EURO STOXX 50® after standard ESG exclusion screens are applied for global norms1, controversial weapons, small arms, military contracting, thermal coal, unconventional oil and gas, tobacco, ESG controversies and ESG risk. Thereafter, companies with the lowest ESG scores are excluded until a total of 20% of holdings of the initial EURO STOXX 50 components are excluded.
Each exclusion is replaced by the largest EURO STOXX® company from the same ICB Supersector that has a higher ESG score, preserving the sector diversification that’s an attribute of the benchmark.
“BlackRock continues to expand its range of sustainable products, increasing the options available to investors interested in incorporating sustainability considerations into their portfolios,” said David Wenicker, Head of iShares & Wealth for Germany at BlackRock.
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Subscribe >The EURO STOXX 50 ESG has returned 55.2% in the past five years, compared with a 47.9% return for its benchmark.2 Nevertheless, the ESG gauge has had a similar risk/return profile as the benchmark, registering a tracking error of 1.8% over the entire period.
“We are pleased to have expanded our collaboration with BlackRock and iShares, and particularly excited to see continued demand for responsible investing strategies,” said Axel Lomholt, General Manager at STOXX. “For 25 years, the EURO STOXX 50 has stood for an accurate and reliable representation of the Eurozone equity market. The EURO STOXX 50 ESG maintains those characteristics while meeting new sustainability requirements that are becoming standard among leading investors.”
Passive ESG ETFs attracted a net EUR 16.1 billion in the first six months of 2023, while total assets invested in the vehicles expanded by 14% to EUR 392 billion, outperforming non-ESG funds, according to STOXX Market Intelligence. Around 8.1% of global passive ETFs’ net inflows this year went to ESG ETFs, meaning the funds (which have a 4.9% share of total ETF’s assets under management) continue to gain territory in the world’s assets landscape.
The EURO STOXX 50 ESG keeps the same liquidity and tradability characteristics of its well-known benchmark, and is part of a large ecosystem that includes one of the world’s most traded futures contracts.
To read more about the ESG benchmark’s composition, download a whitepaper here.
[1] Global norms as guided by the Sustainalytics Global Standards Screening assessment.
[2] Total returns in euros through July 31, 2023.
