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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.

Advertisement Scroll to continue The change, which affects 'custom' funds containing $55.5 billion in assets, follows conversations with German wealth managers, who were keen to see poor ESG performance reflected more quickly across the ETFs, a BlackRock spokesperson said.

The changes will be triggered if a company's MSCI ESG Controversies score 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, leading to its removal from the index. The new rules were introduced to BlackRocks' MSCI custom indicies, where BlackRock defines the index rules, from Dec. 1 after discussions beginning last summer.

Separately, MSCI introduced a similar set of rules for its MSCI ESG Screened Indexes range in February after a consultation with the broader funds industry that began last year. BlackRock has six ETFs based on MSCI's Screened range with assets of around $15 billon.

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