Earnings-related pension insurance company Varma invested EUR 200 million in the sustainable ETF by the global asset management firm BlackRock. Through its investment, Varma's intention is to support companies in lowering their carbon emissions and to reduce the carbon footprint of its own investments. BlackRock is one of the largest asset managers in the world.
The BlackRock U.S. Carbon Transition Readiness ETF invests in large- and mid-capitalization U.S. companies that may be better positioned to benefit from the transition to a low-carbon economy. The ETF's benchmark is the Russell 1000 index, which represents the 1,000 top companies ranked by market value in the U.S. Along with lowering carbon emissions, the ETF focusses on sustainability criteria related to the environment, social issues and good governance.
The ETF was listed on the New York Stock Exchange on 8 April 2021, and in addition to Varma, other significant global investors will invest in the fund. Varma is the only Nordic anchor investor in the ETF. The size of the fund was over EUR 1 billion at the end of the listing day, making it the largest ETF launch ever.
"We are very proud to be able to promote sustainable investment together with BlackRock and other major global investors. This, in effect, allows us to show our support for companies that aim to lower their carbon emissions," says Timo Sallinen, Varma's Head of Listed Securities.
"In addition, Varma's goal is to reduce the carbon footprint of its own investments and achieve a carbon-neutral investment portfolio by 2035. Investing in BlackRock's ETF is one way of reducing the carbon footprint of Varma's investments," says Sallinen.
"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," says Wilhelm Schauman, Head of iShares Institutional Sales in the Nordic Region for BlackRock.
The fund overweights the benefits of low-carbon business
The ETF overweights, relative to the underlying index, companies that are believed to be better positioned to benefit from the transition to a low-carbon economy, and underweights companies that are poorly positioned to benefit from the transition. The criteria for assessing and scoring transition readiness are fossil fuels, clean technology, energy management, waste management and water management.
"The fund invests in companies that demonstrate action or policies for transitioning to low-carbon operations. The scoring is used to weight companies whose business operations are more transition ready," explains Sallinen.