Scottish Widows invests £500m in new BlackRock Global Corporate ESG Insights Bond Fund

Written by Adam Cadle

12/10/2022

Scottish Widows has become the first investor in BlackRock's newly launched BlackRock Global Corporate ESG Insights Bond Fund.

The UK retirement savings provider is initially allocating £500m in some of its multi-asset funds, including those used in its flagship workplace defined contribution default solution,
into BlackRock’s new fund.

The BlackRock Global Corporate ESG Insights Bond Fund seeks to provide broad-based exposure to global investment grade bonds, whilst seeking to achieve certain ESG related aims.

The fund is managed by BlackRock’s Index Fixed Income portfolio management team and aims to deliver a broadly similar level of risk and return as the Bloomberg Global Aggregate Corporate Index GBP Hedged. Its portfolio objectives target a carbon emissions intensity score that is 50% less than the index.

The strategy uses a set of exclusionary screens to remove certain issuers from the investment universe. These exclude companies involved in activities relating to thermal coal and tar sands; tobacco; violators of the UN Global Compact Principles; and controversial weapons, as well as companies connected with nuclear weapons or involved in the production of civilian firearms.

The corporate issuers left in the investment universe are then assessed using the BlackRock
Sustainable Investing Intelligence (BSI Intel) framework, using a variety of ESG datasets
generated by BlackRock and external research providers to evaluate and score corporate issuers. BlackRock combines these various ESG datasets for corporate issuers to create one overall ESG score - the ‘BSI Intel Insight’ - for each corporate issuer. The resulting portfolio is comprised of higher scoring ESG issuers, relative to other corporate issuers in the same or similar industries, whilst seeking to maintain a risk and return profile broadly similar to that of the index.

Maria Nazarova-Doyle, head of pension investments and responsible investments at
Scottish Widows, said: “Working on the creation of these specially tailored funds to drive innovation in ESG investing, rather than just picking an existing solution, helps champion the development of more ambitious responsible investment strategies and products. In doing so we can help more capital flow into climate-aware investment strategies and contribute to pension schemes having greater choice when it comes to responsible investments.”

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