Scottish Widows has become the first investor in Blackrock’s newly launched climate fund, which is designed for the transition to a low carbon economy.
The pension provider is initially allocating £2bn of its pension portfolios into Blackrock’s Climate Transition World Equity Fund.
It marks a shift in strategy for Blackrock, which is using data to measure a company’s exposure and management during the transition. The asset manager said it would help to provide investors with a “broad market approach to invest in the transition to a low carbon economy.”
Blackrock has been at the forefront of pushing climate change and ESG-related issues up the agenda. Last month it punished more than 50 companies over their inaction on global warming after warning of huge investment risks from climate change.
The fund, which launches on Friday, looks to increase investment in companies that are considered well prepared for a transition and reduce exposure to those less equipped.
In January chief executive Larry Fink said Blackrock would get tough on companies that were too slow to take action on climate change. It announced it would put environmental strategy at the core of its investment strategy.
Its change in strategy came after criticism the asset manager had failed to use its power.
Blackrock’s Climate Transition fund also offers portfolio diversification by providing exposure to companies across sectors and regions. The asset manager noted a transition to a low carbon economy would hit hospitality, transportation and healthcare as well as oil and gas companies.
Sarah Melvin, head of UK at Blackrock said: “The global shift to zero and low carbon energy
sources is underway and is accelerating.”
“[The fund] expands our range of sustainable investment solutions… and aims to deliver long-term value to clients based on companies’ readiness to transition to a low carbon economy.”
Maria Nazarova-Doyle, head of pension investments at Scottish Widows said: “Offering customers more sustainable investment choices, and challenging companies in which we invest to behave more sustainably and responsibly, is a central part of our strategy.”