Sustainability Characteristics FAQ

ESG investing is the practice of incorporating environmental, social, and governance information into investment decisions to potentially enhance risk-adjusted returns. ESG metrics include non-financial information that is often not captured in traditional analysis and can impact a portfolio’s long-term returns.

MSCI’s Weighted Average ESG Scores are calculated using weighted averages of ESG scores of underlying fund holdings. It is expressed on a 0-10 scale, with 0 and 10 being the lowest and highest possible scores. MSCI scores underlying holdings according to their exposure to 37 industry-specific ESG risks, and how those risks are managed relative to peers.

MSCI’s Weighted Average Carbon Intensity is a proxy for a fund's exposure to carbon-intensive companies. Calculating a portfolio’s carbon intensity is achieved by dividing greenhouse gas emissions (including emissions directly produced by the company and those consumed by a company) by revenues, then applying a portfolio weight to allow for comparisons between funds of different sizes.

Sustainable index investing offers transparent, rules-based, and cost-efficient exposure to companies that either score highly on ESG characteristics, target specific ESG themes, or seek to generate positive environmental or social impact. At times, sustainable ETFs also may exclude companies within certain industries in pursuit of sustainable objectives.

BlackRock believes sustainable issues — from gender representation in corporate boardrooms to climate change — are critical considerations in the investment process. iShares ETFs offer the world’s broadest suite of dedicated investment solutions; meanwhile, BlackRock has deep expertise in alpha-seeking sustainable strategies, from public debt and equities, privately owned renewable power, commodities, and real asset strategies.