SGX Group and BlackRock spearhead landmark climate action ETF, catalysing sustainable investing in Asia

Published on 14/09/2023

  • Reflects SGX’s stewardship[1] in index investing, cementing our leadership in indices, passive investing and derivatives globally
  • ETF is anchored by Prudential, one of the largest asset owners in Asia and a member of the NZAOA[2]

SGX Group and BlackRock are taking the lead in helping investors reach their low carbon transition objectives with the listing of iShares MSCI Asia ex-Japan Climate Action ETF. SGX, with the support of BlackRock and MSCI, is harnessing the power of its extensive partner network to spearhead the creation and implementation of a comprehensive global ecosystem of climate-related market solutions.

The ETF tracks the MSCI AC Asia ex Japan Climate Action Index, which is part of the suite of MSCI Climate Action Indexes launched in end 2022. The Indexes favour a bottom-up approach and select the top 50% of companies in each GICS® sector based on the company’s carbon intensity and commitments such as science-based target setting, green revenues or opportunities, together with its climate risk management. It is the largest equity ETF launched in Singapore, with assets under management (AUM) of US$426 million at launch.

With this ETF, investors who wish to incorporate low carbon transition objectives in their portfolios can access best-in-class companies in Asia ex Japan who are committed to reducing carbon emissions. The fund is managed by BlackRock, the world’s largest asset manager, and anchored by Prudential, one of the largest asset owners in Asia and a member of the Net Zero Asset Owners Alliance.

In Asia, the acceleration of climate transition has become increasingly evident. As the region manages climate risks, it can also present a substantial investment opportunity. The shift towards renewable energy, sustainable infrastructure and technologies opens new avenues for growth and innovation. Within Asia, Singapore has solidified its position as a sustainable finance hub, attracting a substantial influx of capital from investors seeking to align their financial activities with climate considerations. As such, climate action instruments such as this ETF can play a crucial role by directing funds towards companies and projects focused on climate transition.

Michael Syn, Senior Managing Director and Head of Equities, SGX Group, said, “SGX Group plays a vital role in galvanising stakeholders within the financial ecosystem to mobilise capital and develop solutions to effect real change in addressing climate change. With the market and investors signalling their readiness for it, we have been working in partnership with BlackRock and MSCI to create a new global ecosystem of climate-related instruments such as this ETF and the climate action derivatives that were launched earlier this year. By providing these tools, we are supporting investors in building a diversified portfolio of climate-conscious assets, enabling them to do their part for the transition while benefiting from the potential financial upside.”

Peter Loehnert, APAC Head of iShares and Index Investments, BlackRock, said, “Asia Pacific is the largest and fastest growing region for energy transition investment, offering transformational opportunities for investors with climate-focused objectives. Investors globally are increasingly choosing iShares ETFs as ideal vehicles to align portfolio allocations and implement low-carbon transition goals. This new fund will provide them with an innovative, unique and powerful building block to access companies in the region leading the transition. As the world’s largest provider of ETFs, our aim is to offer clients an unrivalled choice of products to help them achieve their investment goals, and we are pleased that our close partnership with SGX Group has helped bring the fund to Singapore, a state that has had an outsized impact in global climate leadership.”

Gillian Tan, Assistant Managing Director (Development and International) and Chief Sustainability Officer, Monetary Authority of Singapore, said, “The successful launch of the iShares MSCI Asia ex-Japan Climate Action ETF is the outcome of close collaboration between SGX Group, MSCI and BlackRock, and adds to the suite of innovative products in Singapore that supports transition and decarbonisation efforts in Asia. Looking ahead, Singapore welcomes the development of solutions that facilitate decarbonisation, while meeting the investment and risk management needs of issuers, asset owners and investors in the region.”

[1] SGX Group is co-chair of a global workstream on index investing workstream with GFANZ, NZAOA, NZAMi and NZFSPA.

[2] UN-convened Net-Zero Asset Owner Alliance