The fund will use an index to eliminate companies which are involved in severe controversies.

Asset management firm BlackRock has launched The iShares MSCI World SRI UCITS ETF, which looks to provide investors with a sustainable approach to global investing.

The new fund, which is its 11th environmental, social and governance exchange-traded fund in Europe, will look to offer exposure to global stock markets with a focus on companies with the strongest ESG ratings, the firm said in a statement.

MSCI ESG ratings assess how companies are exposed to and manage idiosyncratic risks such as strikes, factory shutdowns, lawsuits, as well as broader industry issues that can create both significant risks and opportunities such as regulation and weather patterns. The MSCI World SRI Select index which the fund tracks also excludes companies involved in severe controversies or in military weapons, civilian firearms, tobacco, alcohol, nuclear power, gambling, adult entertainment and genetically modified organisms.

“We consistently hear from our clients that they are looking more closely at improving the ESG and carbon profile of their investments, which they acknowledge helps manage risk in their portfolio," said  
Manuela Sperandeo, head of specialist sales, iShares Europe, Middle East and Africa. “This ETF is the latest addition to a range that allows investors to express their active investment decisions on a broad range of markets and geographies, quickly and cost-effectively. Importantly, the SRI index tracked by this ETF has also outperformed its parent index since inception with comparable volatility, which means investors would have not forfeited returns.”

BlackRock manages $4.7 billion of ESG ETF strategies on behalf of its clients globally. The firm, as reported by this publication in July, launched the iShares Diversified Commodity Swap UCITS ETF, which provides exposure to a variety of commodity markets for investors seeking portfolio diversification.