Finland’s Varma, a key provider in the country’s earnings-related pension system, said it put €200m into BlackRock’s new US exchange traded fund (ETF) which overweights companies seen as better positioned in the switch to a low-carbon economy.
The €50.2bn pension provider said it was the only European anchor investor in the ETF launch, which qualified as the biggest launch of the passive investment securities ever on their 8 April New York Stock Exchange debut, raising €1bn.
Timo Sallinen, Varma’s CIO, said: “This, in effect, allows us to show our support for companies that aim to lower their carbon emissions.”
Varma said the BlackRock US Carbon Transition Readiness ETF invested in large and mid-cap companies, overweighting – relative to the Russell 1000 index it uses as its benchmark – firms believed to be better positioned to benefit from the transition to a low-carbon economy, and underweighting those poorly positioned in that regard.
The criteria for assessing and scoring transition readiness are fossil fuels, clean technology, energy management, waste management and water management, according to Varma.
Along with lowering carbon emissions, it said the ETF focused on sustainability criteria related to the environment, social issues and good governance.
Sallinen said Varma’s goal was to cut the carbon footprint of its own investments and achieve a carbon-neutral portfolio by 2035.
“Investing in BlackRock’s ETF is one way of reducing the carbon footprint of Varma’s investments,” he said.
Wilhelm Schauman, head of iShares institutional sales in the Nordic Region at BlackRock, said: “The energy transition presents a great investment opportunity and we are committed to continue innovating to bring new solutions forward that help position our clients at the forefront of this shift to a lower carbon economy.”
Two years ago, Ilmarinen – the other main pension insurance company in Finland – invested €750m in one of BlackRock’s previous ESG passive-investment vehicles based on US equities, the BlackRock iShares ESG MSCI USA Leaders ETF, which the Finnish firm had co-developed.
The US-equities ETF launched on Thursday was one of a pair marketed by BlackRock, the other being the BlackRock World ex-US Carbon Transition Readiness ETF. That instrument attracted $500m of investment, according to the asset management giant.
Varma was the only European investor within the consortium of global institutions announced by BlackRock as having invested in the ETFs.
The others named were the California State Teachers’ Retirement System (CalSTRS), Singapore government investment vehicle Temasek, Latin American pensions manager Sura Asset Management, Mexican pensions administrator Profuturo Group, US-headquartered insurer FM Global and NYSE-listed reinsurer RenaissanceRe.