March 10, 2023

BlackRock fast-tracks eviction of ESG violators from MSCI-linked ETFs

BlackRock Inc, the world’s biggest asset manager, has halved the time it takes for companies breaching certain environmental, social and governance-related standards to be removed from a number of its iShares exchange-traded funds. BlackRock's "fast-exit" rule, which went live in December and has not previously been reported, will see such companies removed in 45 days at most rather than 90 days previously. The ruling covers 35 of its European listed ESG ETFs that track MSCI indices.

The changes will be triggered if a company’s MSCI ESG Controversies scores drops to zero, on a scale of 0-9, or if MSCI deems a company to be in violation of the United Nations Global Compact (UNGC), leading to its removal from the index.

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Invert Insights:

BlackRock’s stringent “fast-exit” rule will highlight organization’s poor ESG performance faster and will create farther-reaching consequences.

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Biden Announces $6 Billion Funding to Scale Industrial Decarbonization Projects

The Biden administration unveiled a series of initiatives aimed at reducing greenhouse gas emissions in the industrial sector, including the announcement of a $6 billion Industrial Demonstrations Program to accelerate decarbonization projects targeting hard-to-abate sectors. 

The administration’s Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL) include allocations of nearly $500 billion to climate-focused investments in areas including carbon-free energy, manufacturing and clean technologies. For the federal government’s own projects, the administration last year launched a “Buy Clean Task Force,” aimed at promoting clean procurement, targeting the use of construction materials with lower embodied emissions and pollutants across their lifecycle.

You may recall, in January the Biden administration revealed their plans for decarbonization of the Transportation sector which accounts for approximately 1/5th of global CO2 emissions. 

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Invert Insights:

The decarbonization of the industrial sector is the start to create cleaner sectors including increasing energy efficiency, migrating to clean energy sources and promoting cleaner procurement by prioritizing purchases of items with lower carbon emissions across their lifecycle. The support of the U.S. government initiatives will make the large-scale application of these solutions cheaper and easier.

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The Climate Benefits of a Four-Day Workweek

A four-day workweek is gaining interest as a way to improve productivity and employee well-being. The world's biggest ever four-day workweek trial, which took place in the UK from June to December 2022, aimed to assess whether companies could maintain productivity with a reduced working time and found that productivity increased by 22%. 

The trial also showed that a shorter workweek could help the planet by reducing carbon emissions, with a 21% reduction in the number of miles traveled by car on average. Additionally, many people spent the time saved from not commuting or working engaged in low-carbon activities like hiking or stay-at-home hobbies.

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Invert Insights:

The impact of a four-day workweek in climate is still being assessed as companies do not have control over how employees will spend their extra day and may not be feasible in traditional sectors. However, climate action is not only for businesses but for everyone, putting climate education as a key to a climate-resilient future.