Collecting £702m over a few weeks in Britain. Yes, it is possible: this is the amount of money that BlackRock’s £1.6bn World Low Carbon Equity Tracker fund has attracted since the beginning of the year. In comparison, its flagship Global Equity Tracker recorded £264m of outflows, according to the Financial Times.
This fund closely follows the performances of the MSCI World Low Carbon Target Index, itself aiming at “managing risks” in the transition toward a sustainable economy.
We have already criticized this way of conceptualizing sustainability (Whatever it takes to be (un)aligned), as it runs against what ESG stands for. Adopting a benchmark-investing approach risks giving a premium to not-so-green and not-so-social companies, as already observed in recent market pricing owing to vast herding.
ESG investors should instead remain pro-active and act independently from any index box, as the EU Commission’s work to give a common definition on what sustainability mean is still ongoing.
A look at the 10 top holdings of the MSCI “low carbon” index should trigger alarms for every ESG investor. Any professional can achieve “carbon emissions reduction” if it stays away (or underweight) from the most carbon intensive, but this misses the whole point of the “sustainable transition”.
Index replicating sustainable strategies are good at growing AuMs, not at promoting a shift to a better world. Dashing for indices runs against the fiduciary interests of savers. ESG has still a long way to go when applied to fund managers.
More ESG research : click here
Related posts
About Us
Founded in 2007, AlphaValue is the world’s leading provider of Independent European Equity and Credit Research. We provide comprehensive, unconflicted research-only (no execution, no corporate finance) coverage of c. 480 European mid and large cap stocks. We have an average of 46% of negative recommendations at any one time. Learn more at www.alphavalue.com
Subscribe Now
Recent Posts
BBVA’s superiority and optionality
Sanofi’s mastermind at work
Stellantis is shooting for the stars
Categories
- Activists (24)
- ESG (15)
- Research (88)
- Stocks to Watch (65)
- Uncategorized (2)
- Under Fire (42)
Stay connected