Finland’s largest pension insurance company has invested €750m in an exchange-traded fund (ETF) tracking the US stock market it co-developed with iShares.

The new product is the third ETF run according to environmental, social and governance (ESG) principles that the €47bn provider has helped create this year.

The pensions insurer said such collaborations enabled it to find suitable passive products not previously available as it worked on implementing its “extensive ESG strategy”.

The latest investment is in the BlackRock iShares ESG MSCI USA Leaders ETF, which tracks MSCI’s ESG index of companies with the best corporate responsibility rating from different industries. The index assesses companies’ performance on ESG issues and excludes the tobacco, alcohol, gambling and weapons industries.

In March, Ilmarinen invested more than €700m in the Xtrackers MSCI USA Leaders Equity ETF, tracking the same index and developed in partnership with DWS’ Xtrackers ETF arm.

Ilmarinen and DWS, NYSE, 14 March 2019

Source: NYSE

Ilmarinen and DWS staff rang the closing bell at the New York Stock Exchange on 14 March this year to mark the launch of a new ETF

Ilmarinen has been co-developing ETFs for several months, marking the first launch in February with an investment in the Lyxor MSCI EUR ESG Leaders ETF.

Anna Hyrske, head of responsible investment at Ilmarinen, said: “We are pleased that new ESG alternatives will also come onto the market for passive investment, and we are happy to be involved with the various players in developing them.”

Hyrske told IPE the ETF development work had taken the form of discussions about the problems Ilmarinen wanted to see solved using these ETFs.

“The issues have been, for example, index selection, feedback on pricing and ESG components,” she said.

Ilmarinen had an extensive responsible investment policy covering all asset classes, Hyrske said, but had found it difficult to find suitable passive products.

“Through these collaborations we have been part of an effort that is not bespoke to Ilmarinen but allows other investors – including retail investors – to invest into passive ESG products,” Hyrske said.

“We have not changed allocation from active to passive. This has been a shift from one type of passive products to another type of passive products.”