This fund lands in the 10% of strategies with the lowest ESG risk in the Infrastructure Sector Equity category, earning it the highest Morningstar Sustainability Rating of 5 globes. 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.
Based on its latest prospectus, sustainability or ESG factors are a focus in the investment process of BlackRock Infrastructure Sust Opps Fd. Funds with ESG-focused mandates are more likely to deliver positive sustainability outcomes. BlackRock Infrastructure Sust Opps Fd has an asset-weighted Carbon Risk Score of 6.9, indicating that its companies have low exposure to carbon-related risks. These are risks associated with the transition to a low-carbon economy such as increased regulation, changing consumer preferences, technological advancements, and stranded assets. Blackrock Infrastructure Sust Opps Fd shows 38.0% involvement in carbon solutions. This percentage is high in absolute terms and surpasses the 23.9% average involvement of its peers in the Infrastructure category. Carbon solutions include products and services related to renewable energy, energy efficiency, green buildings, green transportation, and so on. 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.
No companies held by BlackRock Infrastructure Sust Opps Fd are recognized as being involved in controversies at a high or severe level. From bribery and corruption to workplace discrimination and environmental incidents, controversies are incidents that have a negative impact on stakeholders or the environment, which create some degree of financial risk for the company. Severe and high controversies can have significant financial repercussions, ranging from legal penalties to consumer boycotts. In addition, they can damage the reputation of both companies themselves and their shareholders.
Currently, the fund has 48.7% involvement in fossil fuels. It is considered high in absolute terms, albeit roughly on par with 48.7% for its average category peer. Companies are considered involved in fossil fuels if they derive some revenue from thermal coal, oil, and gas. By prospectus, the fund aims to avoid, or limit its exposure to, companies associated with controversial weapons, tobacco, thermal coal, and and small arms. Yet this goal is far from achieved, as the fund exhibits 15.65% exposure to thermal coal. This compares with 10.67% for its average peer in the Infrastructure Sector Equity category.