BlackRock LifePath® Index 2065 Fund has several promising attributes that may appeal to sustainability-focused investors.
This strategy has an above-average Morningstar Sustainability Rating of 4 globes, indicating that the ESG risk of holdings in its portfolio is relatively low compared with those of its peers in the Target Date category. ESG risk measures the degree to which material environmental, social, and governance issues, such as climate change and inequalities, could affect valuations. ESG risk differs from impact, which is about driving positive environmental and social outcomes for society’s benefit.
BlackRock LifePath® Index 2065 Fund has a Carbon Risk Score of 8.63, indicating portfolio companies face low carbon-related risks in the transition to a low-carbon economy. Currently, the fund has 8.39% involvement in fossil fuels, which compares favorably with 8.57% for its average category peer. Companies are considered involved in fossil fuels if they derive some revenue from thermal coal, oil, and gas.
One potential issue for a sustainability-focused investor is that BlackRock LifePath® Index 2065 Fund doesn’t have an ESG-focused mandate. Funds with an ESG-focused mandate are more likely to align with the expectations of an investor who cares about sustainability issues.
The fund exhibits moderate exposure (7.58%) to companies with high or severe controversies. From bribery and corruption to workplace discrimination and environmental incidents, controversies are incidents that may negatively affect stakeholders, the environment, or the company’s operations.