Skip to Content

iShares $ Corp Bond ESG ETF MXN H Acc SUOMX Sustainability

Sustainability Analysis

Author Image

Sustainability Summary

iShares$ Corp Bond ESG ETF has a number of positive attributes that may appeal to sustainability-focused investors.

iShares $ Corp Bond ESG ETF has an average Morningstar Sustainability Rating of 3 globes, indicating that the ESG risk of holdings in its portfolio is similar to that of its peers in the US Fixed Income category. Funds with 4 or 5 globes tend to hold securities that are less exposed to ESG risk. ESG risk measures the degree to which material environmental, social, and governance issues, such as climate change, biodiversity, human capital, as well as bribery and corruption, could affect valuations. ESG risk differs from impact, which is about driving positive environmental and social outcomes for society’s benefit.

iShares $ Corp Bond ESG ETF promotes environmental and/or social characteristics within the meaning of Article 8 of the Sustainable Finance Disclosure Regulation. Funds classified by their managers as Article 8 or Article 9 are more likely to deliver positive sustainability outcomes. One key area of strength for iShares $ Corp Bond ESG ETF is its low Morningstar Portfolio Carbon Risk Score of 7.12 and very low fossil fuel exposure over the past 12 months, which earns it the Morningstar Low Carbon Designation. Thus, the companies held in the portfolio are in general alignment with the transition to a low-carbon economy.

The fund aims to avoid, or limit exposure to, companies in violation with international norms, such as the UN Global Compact or the Universal Declaration of Human Rights.

The fund's 6.6% involvement in carbon solutions is roughly in line with the 7.5% average involvement of its peers in the Other Bond category. Carbon solutions include products and services related to renewable energy, energy efficiency, green buildings, green transportation, and so on. By prospectus, the fund aims to avoid, or limit its exposure to, companies associated with controversial weapons, tobacco, and and thermal coal. The fund mostly fulfills this goal; however, it does exhibit 0.23% exposure to companies involved in thermal coal. This compares with 1.69% for its average peer in the US Fixed Income category. The fund has a modest level of exposure (5.91%) to companies with high or severe controversies. Companies with controversies are involved in incidents such as corruption, employee abuses, and that pose some degree of business risks to the company. Severe and high controversies can have significant financial repercussions, ranging from legal penalties to consumer boycotts. In addition, they controversies can damage the reputation of both companies themselves and their shareholders.

ESG Commitment Level Asset Manager