From eliminating certain exposures to focusing on the top-rated environmental, social and governance (ESG) performers, there are many different ways to incorporate sustainable investing into the core of your portfolio.
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
Risk: This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This is for illustrative and informational purposes and is subject to change. It has not been approved by any regulatory authority or securities regulator. The environmental, social and governance (“ESG”) considerations discussed herein may affect an investment team’s decision to invest in certain companies or industries from time to time. Results may differ from portfolios that do not apply similar ESG considerations to their investment process.
Controversial business areas: civilian firearms, controversial weapons, nuclear weapons, oil sands, thermal coal, tobacco, as well as any company found in violation of the principles enshrined in the UN Global Compact.
Values-based: alcohol, adult entertainment, gambling, genetically modified organisms, nuclear power.
For further details regarding MSCI's methodology, see footnote1 in the source.
Companies with severe controversies: A controversy case is defined as an instance or ongoing situation in which company operations and/or products allegedly have a negative environmental, social, and/or governance impact. Each controversy case is assessed for the severity of its impact on society or the environment, and is consequently rated very severe, severe, moderate or minor. For further details regarding MSCI's methodology, see footnote2 in the source.
Tracking error compared to traditional parent indexes since inception.
The MSCI ESG quality score is calculated as the weighted average of an underlying holding's ESG scores. It is provided on a 0-10 scale, with 0 and 10 being the respective lowest and highest possible scores. MSCI scores underlying holdings according to their exposure to 37 industry-specific ESG risks, and their ability to manage those risks relative to peers. These issuer-level ESG scores correspond to an issuer-level ESG rating. For further details regarding MSCI’s methodology, see footnote3 in the source underneath this table.
A portfolio's weighted average carbon intensity is determined by calculating the carbon intensity (scope 1 + 2 emissions per million dollars of sales) for each portfolio company and then calculating the weighted average using the portfolio weight.
Scope 1 emissions are those from sources directly owned or controlled by the company, typically direct combustion of fuel in a furnace or vehicle.
Scope 2 emissions are those caused by the generation of electricity purchased by the company.
Scope 3 emissions include an array of indirect emissions resulting from activities such as business travel, the distribution of products by third parties, and the downstream use of a company's products (i.e. by customers).
For further details regarding MSCI's methodology, see footnote4 in the source.
ESG Screened
Standard Benchmark
ESG Enchanced
ESG Screened
SRI
ESG Enhanced
Controversial business areas: civilian firearms, controversial weapons, nuclear weapons, oil sands, thermal coal, tobacco, as well as any company found in violation of the principles enshrined in the UN Global Compact.
Values-based: alcohol, adult entertainment, gambling, genetically modified organisms, nuclear power.
For further details regarding MSCI's methodology, see footnote1 in the source.
Companies with severe controversies: A controversy case is defined as an instance or ongoing situation in which company operations and/or products allegedly have a negative environmental, social, and/or governance impact. Each controversy case is assessed for the severity of its impact on society or the environment, and is consequently rated very severe, severe, moderate or minor. For further details regarding MSCI's methodology, see footnote2 in the source.
Tracking error compared to traditional parent indexes since inception.
The MSCI ESG quality score is calculated as the weighted average of an underlying holding's ESG scores. It is provided on a 0-10 scale, with 0 and 10 being the respective lowest and highest possible scores. MSCI scores underlying holdings according to their exposure to 37 industry-specific ESG risks, and their ability to manage those risks relative to peers. These issuer-level ESG scores correspond to an issuer-level ESG rating. For further details regarding MSCI’s methodology, see footnote3 in the source underneath this table.
A portfolio's weighted average carbon intensity is determined by calculating the carbon intensity (scope 1 + 2 emissions per million dollars of sales) for each portfolio company and then calculating the weighted average using the portfolio weight.
Scope 1 emissions are those from sources directly owned or controlled by the company, typically direct combustion of fuel in a furnace or vehicle.
Scope 2 emissions are those caused by the generation of electricity purchased by the company.
Scope 3 emissions include an array of indirect emissions resulting from activities such as business travel, the distribution of products by third parties, and the downstream use of a company's products (i.e. by customers).
For further details regarding MSCI's methodology, see footnote4 in the source.
ESG Screened
Standard Benchmark
ESG Enchanced
ESG Screened
SRI
ESG Enhanced
Controversial business areas: civilian firearms, controversial weapons, nuclear weapons, oil sands, thermal coal, tobacco, as well as any company found in violation of the principles enshrined in the UN Global Compact.
Values-based: alcohol, adult entertainment, gambling, genetically modified organisms, nuclear power.
For further details regarding MSCI's methodology, see footnote1 in the source.
Companies with severe controversies: A controversy case is defined as an instance or ongoing situation in which company operations and/or products allegedly have a negative environmental, social, and/or governance impact. Each controversy case is assessed for the severity of its impact on society or the environment, and is consequently rated very severe, severe, moderate or minor. For further details regarding MSCI's methodology, see footnote2 in the source.
Tracking error compared to traditional parent indexes since inception.
The MSCI ESG quality score is calculated as the weighted average of an underlying holding's ESG scores. It is provided on a 0-10 scale, with 0 and 10 being the respective lowest and highest possible scores. MSCI scores underlying holdings according to their exposure to 37 industry-specific ESG risks, and their ability to manage those risks relative to peers. These issuer-level ESG scores correspond to an issuer-level ESG rating. For further details regarding MSCI’s methodology, see footnote3 in the source underneath this table.
A portfolio's weighted average carbon intensity is determined by calculating the carbon intensity (scope 1 + 2 emissions per million dollars of sales) for each portfolio company and then calculating the weighted average using the portfolio weight.
Scope 1 emissions are those from sources directly owned or controlled by the company, typically direct combustion of fuel in a furnace or vehicle.
Scope 2 emissions are those caused by the generation of electricity purchased by the company.
Scope 3 emissions include an array of indirect emissions resulting from activities such as business travel, the distribution of products by third parties, and the downstream use of a company's products (i.e. by customers).
For further details regarding MSCI's methodology, see footnote4 in the source.
ESG Screened
Standard Benchmark
ESG Enchanced
ESG Screened
SRI
ESG Enhanced
Controversial business areas: civilian firearms, controversial weapons, nuclear weapons, oil sands, thermal coal, tobacco, as well as any company found in violation of the principles enshrined in the UN Global Compact.
Values-based: alcohol, adult entertainment, gambling, genetically modified organisms, nuclear power.
For further details regarding MSCI's methodology, see footnote1 in the source.
Companies with severe controversies: A controversy case is defined as an instance or ongoing situation in which company operations and/or products allegedly have a negative environmental, social, and/or governance impact. Each controversy case is assessed for the severity of its impact on society or the environment, and is consequently rated very severe, severe, moderate or minor. For further details regarding MSCI's methodology, see footnote2 in the source.
Tracking error compared to traditional parent indexes since inception.
The MSCI ESG quality score is calculated as the weighted average of an underlying holding's ESG scores. It is provided on a 0-10 scale, with 0 and 10 being the respective lowest and highest possible scores. MSCI scores underlying holdings according to their exposure to 37 industry-specific ESG risks, and their ability to manage those risks relative to peers. These issuer-level ESG scores correspond to an issuer-level ESG rating. For further details regarding MSCI’s methodology, see footnote3 in the source underneath this table.
A portfolio's weighted average carbon intensity is determined by calculating the carbon intensity (scope 1 + 2 emissions per million dollars of sales) for each portfolio company and then calculating the weighted average using the portfolio weight.
Scope 1 emissions are those from sources directly owned or controlled by the company, typically direct combustion of fuel in a furnace or vehicle.
Scope 2 emissions are those caused by the generation of electricity purchased by the company.
Scope 3 emissions include an array of indirect emissions resulting from activities such as business travel, the distribution of products by third parties, and the downstream use of a company's products (i.e. by customers).
For further details regarding MSCI's methodology, see footnote4 in the source.
ESG Screened
Standard Benchmark
ESG Enchanced
ESG Screened
SRI
ESG Enhanced
Controversial business areas: civilian firearms, controversial weapons, nuclear weapons, oil sands, thermal coal, tobacco, as well as any company found in violation of the principles enshrined in the UN Global Compact.
Values-based: alcohol, adult entertainment, gambling, genetically modified organisms and nuclear power.
For further details regarding MSCI's methodology, see footnote1 in the source.
Companies with severe controversies: A controversy case is defined as an instance or ongoing situation in which company operations and/or products allegedly have a negative environmental, social, and/or governance impact. Each controversy case is assessed for the severity of its impact on society or the environment, and is consequently rated very severe, severe, moderate or minor. For further details regarding MSCI's methodology, see footnote2 in the source.
Tracking error compared to traditional parent indexes since inception.
The MSCI ESG quality score is calculated as the weighted average of an underlying holding's ESG scores. It is provided on a 0-10 scale, with 0 and 10 being the respective lowest and highest possible scores. MSCI scores underlying holdings according to their exposure to 37 industry-specific ESG risks, and their ability to manage those risks relative to peers. These issuer-level ESG scores correspond to an issuer-level ESG rating. For further details regarding MSCI’s methodology, see footnote3 in the source underneath this table.
A portfolio's weighted average carbon intensity is determined by calculating the carbon intensity (scope 1 + 2 emissions per million dollars of sales) for each portfolio company and then calculating the weighted average using the portfolio weight
Scope 1 emissions are those from sources directly owned or controlled by the company, typically direct combustion of fuel in a furnace or vehicle.
Scope 2 emissions are those caused by the generation of electricity purchased by the company.
Scope 3 emissions include an array of indirect emissions resulting from activities such as business travel, the distribution of products by third parties, and the downstream use of a company's products (i.e. by customers).
For further details regarding MSCI's methodology, see footnote4 in the source.
ESG Screened
Standard Benchmark
ESG Enchanced
ESG Screened
SRI
ESG Enhanced
Controversial business areas: civilian firearms, controversial weapons, nuclear weapons, oil sands, thermal coal, tobacco, as well as any company found in violation of the principles enshrined in the UN Global Compact.
Values-based: alcohol, adult entertainment, gambling, genetically modified organisms, nuclear power.
For further details regarding MSCI's methodology, see footnote1 in the source.
Companies with severe controversies: A controversy case is defined as an instance or ongoing situation in which company operations and/or products allegedly have a negative environmental, social, and/or governance impact. Each controversy case is assessed for the severity of its impact on society or the environment, and is consequently rated very severe, severe, moderate or minor. For further details regarding MSCI's methodology, see footnote2 in the source.
Tracking error compared to traditional parent indexes since inception.
The MSCI ESG quality score is calculated as the weighted average of an underlying holding's ESG scores. It is provided on a 0-10 scale, with 0 and 10 being the respective lowest and highest possible scores. MSCI scores underlying holdings according to their exposure to 37 industry-specific ESG risks, and their ability to manage those risks relative to peers. These issuer-level ESG scores correspond to an issuer-level ESG rating. For further details regarding MSCI’s methodology, see footnote3 in the source underneath this table.
A portfolio's weighted average carbon intensity is determined by calculating the carbon intensity (scope 1 + 2 emissions per million dollars of sales) for each portfolio company and then calculating the weighted average using the portfolio weight.
Scope 1 emissions are those from sources directly owned or controlled by the company, typically direct combustion of fuel in a furnace or vehicle.
Scope 2 emissions are those caused by the generation of electricity purchased by the company.
Scope 3 emissions include an array of indirect emissions resulting from activities such as business travel, the distribution of products by third parties, and the downstream use of a company's products (i.e. by customers).
For further details regarding MSCI's methodology, see footnote4 in the source.
ESG Screened
Standard Benchmark
ESG Enchanced
ESG Screened
SRI
ESG Enhanced
Sustainable bond strategies may screen out controversial business areas and give a higher weighting to companies with the strongest commitments to positive environmental, social and governance (ESG) business practices.
All data sourced from BlackRock and MSCI, correct as at March 2020.
Sustainability characteristics and business involvement metrics are from MSCI, not BlackRock. Review the methodology behind the metrics: 1Business Involvement Screening Research, 2ESG Controversies, 3ESG Ratings, 4Index Carbon Footprint Metrics.
This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any financial instrument or product or to adopt any investment strategy.