The world’s biggest asset manager BlackRock told clients on Wednesday that 17% of the 2 trillion euros ($2.4 trillion) in assets it manages covered by new EU environmental, social and governance rules are classed as sustainable.
However, 70% of the funds launched or repositioned in Europe this year should meet the new threshold, it told clients, part of its drive to be a regional market leader in sustainable finance.
“Our ambition is to move more money into sustainable products than any other asset manager in Europe,” Thomas Fekete, head of BlackRock Sustainable Investing for EMEA, said.
The European Union’s Sustainable Finance Disclosure Regulation (SFDR), the first part of which goes live today, aims to harmonise standards and increase transparency in the growing market for sustainable financial products.
By forcing investors to be clear about how they assess environmental, social and governance (ESG) issues such as corporate carbon emissions, policymakers hope to stamp out ‘greenwashing’, where lofty sustainability claims are not backed up by action.
BlackRock, which manages around $8.7 trillion globally, said SFDR would boost demand for sustainable products in Europe, as more investors look to capture the opportunity created by the global transition to a low-carbon economy.
“We welcome SFDR as a catalyst for accelerating sustainability in Europe,” said Christian Hyldahl, BlackRock’s co-head of continental Europe.
Funds will need to be classed as either Article 9, 8 or 6 – fully focused on sustainable objectives; fully or partly focused on environmental, social or sustainability issues; or not focused on sustainability.
BlackRock said some 332 billion euros’ worth of the assets that fall under the scope of SFDR – including both retail funds and bespoke mandates for larger clients – would be classed as either article 8 or 9 on day one.
In a sign of growing client demand for sustainable finance, those funds took in 74% of actively managed flows and 38% of index-tracking flows in 2020, or nearly 70 billion euros, the memo said.
While the bulk of its assets – much of which are held via vanilla exchange-traded funds – are not classed as sustainable, BlackRock said it was reviewing its flagship European fund ranges and hoped to provide sustainable alternatives for clients.
Over time, it hoped to “provide a transition opportunity” for more than 50% of the assets currently held in the mainstream funds.