February 28, 2011
iShares Launches Sustainable ETFs
by Robert Kropp
Two new sustainable equity exchange-traded vehicles will track the Dow Jones Sustainability Indexes
and trade on the London Stock Exchange.
BlackRock, the New York-based investment
management firm with $3.56 trillion in assets under management, announced today that its iShares platform has launched two sustainable
equity exchange-traded vehicles (ETFs) on the London Stock Exchange.
According to a
release, the ETFs were developed "in response to demand for funds which invest according to
environmental, social and governance (ESG) criteria."
ETFs are open-ended funds that are
traded on an exchange. Unlike mutual funds, ETF shares can be traded at any time while the host
stock market is open. Since Standard and Poor's created its Deposit Receipt ETF in 1993, ETFs have
experienced remarkable growth.
The iShares Dow Jones Global Sustainability Screened fund
and the iShares Dow Jones Europe Sustainability Screened fund will use as their benchmarks the Dow Jones Sustainability Indexes
(DJSI), whose components are selected according to corporate sustainability assessments
provided by Sustainable Asset Management
(SAM), a Swiss-based investment group focused exclusively on sustainability investing.
In addition to the best-in-class selection of sustainable companies, SAM's corporate
sustainability assessments exclude companies involved in alcohol, tobacco, gambling, armaments, and
The top holdings in the Global ETF are HSBC, Nestle, and BHP
Billiton. The top holdings in the European ETF are HSBC, Nestle, and Novartis.
In the US,
iShares already manages the MSCI USA ESG Select Social Index Fund, launched in 2005, and the MSCI
KLD 400 Social Index Fund (DSI), launched in 2006.
In May, 2010, Pax World Management announced the launch of what the firm
described as "the first family of exchange traded funds (ETFs) devoted exclusively to a Sustainable
Investing approach." Pax World's ETFs track the performance of the FTSE4Good Index Series.