What are the key assumptions and limitations of the ITR metric? The bands help to underscore the underlying uncertainty in the calculations and the variability of the metric. As a result, BlackRock publishes MSCI’s ITR metric for its funds in temperature range bands. A summary explanation of MSCI’s methodology and assumptions for its ITR metric can be found here.īecause the ITR metric is calculated in part by considering the potential for a company within the fund’s portfolio to reduce its emissions over time, it is forward-looking and prone to limitations. Note, only corporate issuers are covered within the calculation. If emissions in the global economy followed the same trend as the emissions of companies within the fund's portfolio, global temperatures would ultimately rise within this band. The ITR metric is calculated by looking at the current emissions intensity of companies within the fund's portfolio as well as the potential for those companies to reduce its emissions over time. A net zero emissions economy is one that balances emissions and removals. Scientific consensus suggests that reducing emissions until they reach net zero around mid-century (2050-2070) is how this goal could be met. The ITR metric is used to provide an indication of alignment to the temperature goal of the Paris Agreement for a company or a portfolio. The temperature goal of the Paris Agreement is to limit global warming to well below 2☌ above pre-industrial levels, and ideally 1.5 ☌, which will help us avoid the most severe impacts of climate change. To address climate change, many of the world's major countries have signed the Paris Agreement. What is the Implied Temperature Rise (ITR) metric? Learn what the metric means, how it is calculated, and about the assumptions and limitations for this forward-looking climate-related metric.Ĭlimate change is one of the greatest challenges in human history and will have profound implications for investors. Review the MSCI methodologies behind Sustainability Characteristics using the links below. For more information regarding a fund's investment strategy, please see the fund's prospectus. Unless otherwise stated in fund documentation and included within a fund’s investment objective, the metrics do not change a fund’s investment objective or constrain the fund’s investable universe, and there is no indication that an ESG or Impact focused investment strategy or exclusionary screens will be adopted by a fund. The metrics are not indicative of how or whether ESG factors will be integrated into a fund. Sustainability Characteristics should not be considered solely or in isolation, but instead are one type of information that investors may wish to consider when assessing a fund. They are provided for transparency and for information purposes only. Sustainability Characteristics do not provide an indication of current or future performance nor do they represent the potential risk and reward profile of a fund. Alongside other metrics and information, these enable investors to evaluate funds on certain environmental, social and governance characteristics. Sustainability Characteristics provide investors with specific non-traditional metrics. There are numerous other factors related to the markets in general or the implementation of any specific investment strategy, which cannot be fully accounted for the in the preparation of simulated results and all of which can adversely affect actual results.

In addition, since trades have not actually been executed, simulated results cannot account for the impact of certain market risks such as lack of liquidity.

There are frequently differences between simulated performance results and the actual results subsequently achieved by any particular fund. In addition, hypothetical trading does not involve financial risk. Unlike an actual performance record, simulated results do not represent actual performance and are generally prepared with the benefit of hindsight. As a result of the risks and limitations inherent in hypothetical performance data, hypothetical results may differ from actual performance. Fund expenses, including management fees and other expenses, were deducted. The Hypothetical Growth of $10,000 chart reflects a hypothetical $10,000 investment and assumes reinvestment of dividends and capital gains. The above results are hypothetical and are intended for illustrative purposes only.

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