BlackRock integrates ESG policy into DC default strategy

An environmental, social and governance (ESG) policy, which includes a climate objective and other sustainable related objectives, has been formally integrated into BlackRock's LifePath UK investment strategy’s fund prospectus.

The addition of a formal ESG policy has been highlighted by BlackRock as a continuation of LifePath UK’s ESG journey, and as a reflection of scheme members’ requirements for sustainable objectives alongside evolving pension regulation.

In particular, the update includes a new target to achieve an absolute reduction of 50 per cent in carbon emissions intensity by sales over a 10-year period, and to achieve a lower portfolio carbon emissions intensity by sales relative to a Reference Comparator.

In addition to this, the strategy will aim to invest a minimum of 80 per cent of the assets held in corporate issuers in ESG screened/optimised strategies, and invest a minimum of 80 per cent of the assets held in sovereign issuers in strategies with an ESG sovereign rating of BB or higher.

A default defined contribution (DC) strategy, BlackRock’s LifePath UK strategy includes a series of target date funds (TDFs), which provide members with broad and diversified access to 11 asset classes invested through index funds.

According to the group, BlackRock has already increased the strategy's ESG exposure and now has around 66 per cent of total assets, representing around £6bn, invested in sustainable building blocks.

BlackRock head of UK, Sarah Melvin, commented: “The formal adoption of an ESG policy in our LifePath UK strategy reflects BlackRock’s commitment to listening to our clients and providing sustainable solutions that meet their expectations.

“The update further enhances LifePath as a leading default strategy for the UK DC market, and we are excited to strengthen BlackRock’s efforts to help our clients navigate the transition.”

BlackRock stated that it will continue developing tools and data that align with LifePath UK’s approach to ESG integration in the years ahead.

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