Launching a $426 million climate action fund for Asia, Singapore Exchange (SGX Group) has partnered with American multinational investment company BlackRock.
With the listing of the iShares MSCI Asia ex-Japan Climate Action ETF, according to a statement from SGX on Thursday, both parties are taking the initiative to assist investors in achieving their low carbon transition goals.
The statement claims that SGX is utilizing the strength of its broad partner network to lead the development and implementation of a comprehensive global ecosystem of market solutions for climate change, with the assistance of BlackRock and MSCI.
The MSCI AC Asia ex-Japan Climate Action Index, one of the MSCI Climate Action Indexes launched at the end of 2022, is what the ETF tracks.
Based on the company’s carbon intensity, commitments like science-based target setting, green revenues or opportunities, as well as its climate risk management, the Indexes favor a bottom-up approach and choose the top 50% of companies in each GICS sector.
With $426 million in assets under management (AUM) at launch, it is the largest equity ETF ever introduced in Singapore.
With the help of this ETF, investors who want to include low-carbon transition goals in their portfolios can gain access to Asia ex-Japan’s best-in-class businesses that are dedicated to cutting carbon emissions.
Prudential, one of the largest asset owners in Asia and a member of the Net Zero Asset Owners Alliance serves as the fund’s anchor and is managed by BlackRock, the largest asset manager in the world.
The statement claims that Asia has begun to see an acceleration of the climate transition.
In addition to managing climate risks, the region, according to SGX, can offer a sizable investment opportunity.
It claimed that the transition to sustainable infrastructure, technologies, and energy sources creates new opportunities for development and innovation.
It also pointed out that, within Asia, Singapore has cemented its reputation as a center for sustainable finance, drawing a sizable inflow of capital from investors looking to match their financial decisions with environmental concerns.
As a result, it claimed that by allocating funds to businesses and projects aimed at the climate transition, climate action instruments like this ETF can play a crucial role.
“SGX Group plays a vital role in galvanizing stakeholders within the financial ecosystem to mobilize capital and develop solutions to effect real change in addressing climate change,” said Michael Syn, Senior Managing Director and Head of Equities, SGX Group.
“With the market and investors signaling 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,” he said.
