ESG Multiactive Fund | Class A10 Covered (2023)

A summary

The Fund promotes environmental or social characteristics, but does not aim at sustainable investment. The Fund partially invests in Sustainable Investments. BlackRock defines Sustainable Investments as investments in issuers or securities that contribute to an environmental or social objective, do not significantly harm any of those objectives, and where investees follow good governance practices. BlackRock refers to relevant sustainability frameworks to identify investment alignment with environmental or social objectives. Sustainable investments must also meet the requirements of not causing significant harm (DNSH) as defined by applicable law and regulation. BlackRock has developed a set of criteria to assess whether an issuer or investment causes significant harm. The Fund seeks to: (i) address important environmental and social issues using the ESG score; (ii) promote the mitigation of climate change by reducing the intensity of the portfolio's greenhouse gas emissions; (iii) apply the BlackRock EMEA Baseline Screens; and (iv) apply a set of exclusion screens.

The Fund invests globally across the full spectrum of permitted investments, including equities, fixed income transferable securities (which may include some high yield fixed income transferable securities), CIS units, cash, deposits and money market instruments. The Fund follows an asset allocation policy that seeks to maximize total return consistent with ESG-focused investment principles. The binding elements of the investment strategy are as follows: (1) Maintain that the Fund holds at least 20% in Sustainable Investments; (2) Apply BlackRock EMEA baseline screens and exclusion screens; (3) Maintain that the weighted average ESG rating of the Fund will be higher than the ESG rating of the Index after removing at least 20% of the lowest rated securities from the Index; (4) Maintain that the Fund's carbon emissions intensity score is below the Index; (5) Ensure that more than 90% of issuers of securities in which the Fund invests (excluding money market funds) are ESG rated or have been screened for ESG purposes; and (6) Limit investments in companies within the Oil and Gas integrated sector of the Global Industry Classification Standard (GICS) to less than 5% of their total assets. The Fund considers PAIs in sustainability factors through the application of the BlackRock EMEA baseline screens and its carbon reduction target.

A minimum of 70% of the Fund's total assets will be invested in investments that are in line with the environmental and/or social characteristics described above. Of these investments, at least 20% of the Fund's total assets will be invested in Sustainable Investments, and the remainder will be invested in investments aligned with other environmental and/or social characteristics described above. The Fund may invest up to 30% of its total assets in other applications. The Fund is currently not committed to investing more than 0% of its assets in Sustainable Investments with an environmental objective in line with the EU Taxonomy, however these investments may form part of the portfolio.

BlackRock has developed a highly automated compliance process to help ensure that the Fund is managed in accordance with its stated investment guidelines and applicable regulatory requirements. This includes monitoring the Fund's environmental or social characteristics in accordance with the relevant methodology. BlackRock has developed its own methodology for determining Sustainable Investments and the Fund uses a number of other methodologies to measure how well the social or environmental characteristics promoted by the Fund are met.

BlackRock portfolio managers have access to research, data, tools and analytics to integrate ESG insights into their investment process. ESG datasets are sourced from third party data providers including but not limited to MSCI, Sustainalytics, Refinitiv, S&P and Clarity AI. BlackRock applies a comprehensive due diligence process to evaluate provider offerings with highly targeted methodology reviews and coverage assessments based on the product's sustainable investment strategy. Data, including ESG data, received through our existing interfaces and then processed through a series of integrity and quality control checks that seek to ensure the data is of high quality before it is made available for use downstream on BlackRock systems and applications such as Aladdin. BlackRock strives to capture as much of the reported data from companies as possible through third-party data providers, however, industry standards around disclosure frameworks are still evolving, particularly with regard to forward looking indicators. As a result, in certain cases, we rely on estimated measures or proxy data providers to cover our broad universe of investable issuers.

BlackRock continues to monitor developments in the EU's ongoing implementation of its framework for sustainable investment and investment methodologies, seeking to ensure alignment as the regulatory environment changes. ESG datasets are constantly changing and improving as disclosure standards, regulatory frameworks and industry practices evolve. BlackRock continues to work with a wide range of market participants to improve data quality. Sustainable investing and the understanding of sustainability are evolving along with the data environment. Industry participants face challenges in identifying a single metric or set of standardized metrics to provide a complete picture of a company or investment. BlackRock has therefore established a framework for identifying sustainable investments.

Engagement with companies in which we invest our clients' assets occurs on many levels within BlackRock. When investment teams choose to leverage engagement, this can take many forms, but in essence, the portfolio management team would seek to have a regular and ongoing dialogue with executives or directors of engaged investees to promote sound governance and practices. sustainable business practices targeted at the identified ESG characteristics and key adverse indicators, as well as to understand the effectiveness of the company's management and oversight activities aimed at addressing the identified ESG issues. Engagement also allows the portfolio management team to provide feedback on company practices and disclosures.

There is no specific index designated as a benchmark to determine whether this Fund is in line with the environmental and/or social characteristics it promotes.

B. No sustainable investment objective

This financial product promotes environmental or social features, but does not aim at sustainable investment.

Sustainable Investments meet DNSH requirements as defined by applicable law and regulation. BlackRock has developed a set of criteria across all sustainable investments to assess whether an issuer or investment causes significant harm. Investments deemed to cause significant harm do not qualify as sustainable investments.

Indicators of adverse impacts on sustainability factors for each type of investment are assessed using BlackRock's proprietary Sustainable Investing methodology. BlackRock uses third-party data and/or fundamental analysis to identify investments that negatively impact sustainability factors and cause significant harm.

Sustainable Investments are assessed to consider any detrimental impacts and ensure compliance with the international standards of the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight core conventions identified in the International Labor Organization Declaration on Fundamental Principles and Rights at Work and the International Bill of Human Rights. Issuers found to have violated these conventions are not considered Sustainable Investments.

C. Environmental or social characteristics of the financial product

The Fund invests in Sustainable Investments. BlackRock defines Sustainable Investments as investments in issuers or securities that contribute to an environmental or social objective, do not significantly harm any of those objectives, and where investees follow good governance practices. BlackRock refers to relevant sustainability frameworks to identify investment alignment with environmental or social objectives.

Sustainable investments must also meet the requirements of not causing significant harm (DNSH) as defined by applicable law and regulation. BlackRock has developed a set of criteria to assess whether an issuer or investment causes significant harm.

This Fund seeks to address key environmental and social issues that are deemed relevant to issuers' businesses by using ESG scores as a means of assessing issuers' exposure and managing those risks and opportunities. ESG scores recognize that certain environmental and social issues are more relevant based on the type of activity the issuer is engaged in, weighting issues differently in the scoring methodology. The following environmental themes are captured in the environmental component of the ESG score: climate change, natural capital, pollution and waste, and environmental opportunities. The following social themes are captured in the social component of the ESG score: human capital, product responsibility, stakeholder opposition, and social opportunities. Corporate issuers with better ESG scores are perceived as having more sustainable business practices.

Greenhouse gas emissions are categorized into three groups or 'scopes' by the most widely used international accounting tool, the Greenhouse Gas (GHG) Protocol. Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting issuer. Scope 3 includes all other indirect emissions that occur in an issuer's value chain. The Fund seeks to have a portfolio's lower greenhouse gas emissions intensity relative to the Index, which is the estimate of greenhouse gas emissions (Scope 1 and Scope 2) per $1 million of sales proceeds from equity holdings. from the bottom. For the avoidance of doubt, Scope 3 is currently not considered for this calculation.

This Fund applies the BlackRock EMEA baseline screens. This set of filters prevents exposures that have negative environmental outcomes, excluding direct investment in emitters that have significant involvement in thermal coal and bituminous sand extraction, as well as thermal coal-based power generation. Negative social outcomes are also avoided by excluding direct investment in issuers involved in controversial weapons and nuclear weapons, and material involvement in the production and distribution of civilian firearms and tobacco. This Fund also excludes issuers considered to be non-compliant with the 10 Principles of the UN Global Compact, which cover human rights, labor standards, environment and anti-corruption.

This Fund applies a set of exclusion criteria.

The Investment Adviser also intends to limit direct investment in the securities of issuers involved in the production, distribution or licensing of alcoholic products; the ownership or operation of gambling-related activities or facilities; nuclear energy related production, supply and mining activities and production of adult entertainment materials. The assessment of the level of engagement in each activity can be based on percentage of revenue, a defined total revenue threshold, or any connection to a restricted activity, regardless of the amount of revenue received. The Investment Adviser will exclude any issuer with an MSCI ESG rating of less than BBB. The Investment Adviser also intends to limit investments in companies within the Oil and Gas Exploration and Production sector of the Global Industry Classification Standard (GICS) and companies within the Integrated Oil and Gas sector of the Global Industry Classification Standard ( GICS) to less than 5% of its total assets.

The Fund does not use a benchmark for the purpose of obtaining the ESG characteristics it promotes, however the 50% MSCI World Index, 50% Bloomberg Global Aggregate Bond Index Hedged to EUR (the “Index”) is used to compare certain ESG characteristics promoted by the Fund.

D. Investment strategy

The Investment Adviser applies exclusion screens to the portfolio. These include the BlackRock EMEA Baseline Screens, plus limits on direct investment in securities of issuers involved in the production, distribution or licensing of alcoholic products; the ownership or operation of gambling-related activities or facilities; nuclear energy related production, supply and mining activities and production of adult entertainment materials.

The Investment Adviser also intends to limit investments in companies within the Oil and Gas Exploration and Production sector of the Global Industry Classification Standard (GICS) and companies within the Integrated Oil and Gas sector of the Global Industry Classification Standard ( GICS) to less than 5% of its total assets.

More than 90% of issuers of securities in which the Fund invests are ESG rated or have been screened for ESG purposes

The weighted average of the Fund's ESG rating will be higher than the risk index's ESG rating after removing at least 20% of the less highly rated securities from the Index. The Investment Adviser also intends for the Fund to have a lower carbon intensity score than the Index.

The binding elements of the investment strategy are as follows:
1. Maintain that the Fund holds at least 20% in Sustainable Investments.
2. Apply BlackRock EMEA baseline screens and exclusion screens.
3. Maintain that the weighted average ESG rating of the Fund will be higher than the ESG rating of the Index after removing at least 20% of the lowest rated securities from the Index.
4. Maintain that the Fund's carbon emissions intensity score is lower than the Index.
5. Ensure that more than 90% of issuers of securities in which the Fund invests (excluding money market funds) are ESG rated or have been screened for ESG purposes.
6. Limit investments in companies within the Global Industry Classification Standard's (GICS) Integrated Oil and Gas sector to less than 5% of their total assets.

Consideration of the main adverse impacts on sustainability factors

The Fund considers PAIs in sustainability factors through the application of the BlackRock EMEA baseline screens and its carbon reduction target.

The Fund considers the following PAIs:
• GHG Emissions
• GHG intensity of invested companies.
• Exposure to companies active in the fossil fuel sector
• Violations of the principles of the UN Global Compact and the Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises
• Exposure to controversial weapons (antipersonnel mines, cluster munitions, chemical weapons and biological weapons)

Additionally, this Fund takes into account PAIs through BlackRock's DNSH standard for Sustainable Investing. This Fund will provide information on PAIs in its annual report.

good governance policy

BlackRock evaluates investee companies' good governance practices by combining proprietary insights and stakeholder engagement by the Investment Adviser with data from external ESG research providers. BlackRock uses data from third-party ESG research providers to initially identify issuers that may not have satisfactory governance practices against key performance indicators (KPIs) related to sound management structure, employee relations, employee compensation and tax compliance .

When issuers are identified as potentially having issues with respect to good governance, issuers are reviewed to ensure that, where the Investment Adviser agrees with this external assessment, the Investment Adviser is satisfied that the issuer has taken remedial action. or will take remedial action within a reasonable time based on the Investment Adviser's direct engagement with the issuer. The Investment Adviser may also decide to reduce exposure to these issuers.

E. Investment Ratio

The Fund may invest up to 30% of its total assets in other applications.

The Fund may use derivatives for investment purposes and for efficient portfolio management purposes. For derivatives, any ESG ratings or reviews mentioned above will only apply to the underlying investment.

The Fund is currently not committed to investing more than 0% of its assets in Sustainable Investments with an environmental objective in line with the EU Taxonomy, however these investments may form part of the portfolio.

The Fund does not commit to making investments in transitional and enabling activities, however, such investments may form part of the portfolio.

A minimum of 20% of the Fund's total assets will be invested in Sustainable Investments. As noted above, these sustainable investments will be a mix of sustainable investments with an environmental objective that is not aligned with the EU taxonomy or a social objective or a combination of both, and the exact composition may fluctuate.

The Fund invests in Sustainable Investments that are not aligned with the EU Taxonomy for the following reasons: (i) it forms part of the Fund's investment strategy; (ii) data to determine EU Taxonomy alignment may be unavailable; and/or (iii) the underlying economic activities may not be eligible according to the technical screening criteria available from the EU Taxonomy or may not meet all the requirements set out in such technical screening criteria.

Other holdings are limited to 30% and may include derivatives, cash and quasi-cash instruments, and CIS shares or units, and transferable fixed income securities (also known as debt securities) issued by governments and agencies around the world.

Such investments may be used for investment purposes in furtherance of the Fund's investment objective (non-ESG), for liquidity management and/or hedging purposes.

No other properties are considered against minimal environmental or social safeguards.

F. Monitoring of environmental or social characteristics

Portfolio Managers have primary responsibility for complying with the contractual terms of the prospectus and other documents that govern the Fund and are supported by Aladdin, BlackRock's portfolio and risk management software.

The Portfolio Compliance Group (“PCG”), a group within BlackRock's Business Operations, is responsible for coding the Fund's investment restrictions, which may be codified, within BlackRock's pre- and post-trade compliance monitoring system in Aladdin. Where an investment constraint cannot be codified, a manual process is established to test the guidelines.

Pre-trade and post-trade monitoring

When a trade or order is created, the transaction is reviewed against the Fund's investment guidelines by the front-end compliance system in real-time prior to execution. If a non-compliant condition is detected, the trade or order cannot proceed.

Compliance tests are also run post-trade overnight based on end-of-day positions and reported on a T+1 basis. Exceptions and compliance notices are identified and forwarded for investigation to relevant investment professionals, who will engage with relevant subject matter experts as appropriate to resolve. Identification and investigation of potential items are recorded in an electronic system that contains a comprehensive workflow that provides an audit trail. Appropriate corrective action will be taken as needed to resolve exceptions.

Monitoring of certain ESG characteristics may not be automated due to system functionality or data limitations. Such ESG characteristics are subject to periodic review and monitoring to ensure that the product meets the related commitments.

Violations are reported as required by our regulatory obligations to the management company, auditor, depositary and relevant regulator.

When BlackRock delegates part of the management of a Fund to a third party manager, the third party manager is responsible for ensuring compliance with investment guidelines and investment restrictions in accordance with the agreed Investment Management Agreement in effect, including those relating to environment or social characteristics of the Fund. Investment restrictions relating to environmental or social characteristics are generally communicated to the third party manager, who may be updated by BlackRock from time to time in accordance with the Fund's environmental and social characteristics. When the third-party manager executes a passive strategy, the third-party manager can also monitor whether environmental or social characteristics are met by tracking a benchmark that incorporates these characteristics into its methodology. BlackRock receives a daily feed of positions held by the third-party manager and performs post-trade compliance checks in accordance with the back-end compliance process described above. BlackRock also performs periodic due diligence on third party managers to ensure that the monitoring structures in place remain appropriate.

G. Methodologies

BlackRock has adopted the following methodologies in relation to this Fund:

Sustainable Investment Methodology

BlackRock has developed a proprietary methodology for determining sustainable investments, which is divided into a four-part assessment:
(i) Contribution of economic activity to environmental and/or social objectives;
(ii) Do not cause significant damage;
(iii) Meets minimum safeguards; It is
(iv) Good governance (where relevant).

An investment must meet all four members of this test to be considered a sustainable investment. Sustainable Investments are subject to a robust oversight process to ensure regulatory standards are met.

(i) Contribution of economic activity to environmental and/or social objectives

Environmental and social objectives
The Fund invests in Sustainable Investments that contribute to a range of environmental and/or social objectives that may include, but are not limited to, alternative and renewable energy, energy efficiency, pollution prevention or mitigation, reuse and recycling, health, nutrition, sanitation and education and the UN Sustainable Development Goals (“Environmental and Social Goals”).

Evaluation of economic activity
An investment will be a Sustainable Investment (subject to satisfaction of the other three members):

business activity
• Where more than 20% of your revenue attributable to products and/or services is systematically mapped as contributing to Environmental and/or Social Objectives using data from third-party providers. Fundamental analysis can also be used to evaluate a company where there is no data from third-party vendors or when an analyst determines that the data is inaccurate or that there is a more appropriate materiality metric than revenue to identify a company's contribution, such as capital expenditures or recycled inputs.

business practices
• Where the issuer has set a decarbonization target in line with science-based targeting initiatives, as validated by third-party vendor data or through fundamental assessment.
• Demonstrable leadership attribute that highlights a company's critical role as a facilitator of sustainable practices.

fixed income securities
• A resource use bond will be a sustainable investment where the use of resources substantially contributes to an environmental and/or social objective as determined by the fundamental assessment
• Other fixed income securities will be a sustainable investment where the security is in line with environmental and/or social objectives, as determined by the fundamental assessment, such as environmental and/or social asset-backed and mortgage-backed securities issued by supranational entities committed to the promotion of the UN SDGs

(ii) Do no significant harm (DNSH)

Sustainable Investments meet DNSH requirements as defined by applicable law and regulation. BlackRock has developed a set of criteria for all Sustainable Investing to assess whether an investment causes significant harm, considering both third-party data points and fundamental insights. Investments are assessed against these criteria using system-based controls and any that are found to cause significant harm do not qualify as Sustainable Investments. BlackRock evaluates indicators of adverse impacts on sustainability factors for each type of investment defined by the regulation.

The criteria for adverse impacts are assessed using data from third-party providers in relation to an investment's business involvement (in specific activities identified as having negative environmental or social impacts) or environmental or social controversies to exclude investments that BlackRock has determined are detrimental to the indicators. of sustainability subject to limited exceptions, for example when data is considered to be inaccurate or out of date.

Where data is not available, or is substantially incomplete, fundamental analysis will be performed using reasonable efforts to identify impacts that BlackRock determines are detrimental to sustainability indicators.

(iii) Meet the minimum safeguards

Sustainable Investments are assessed using information from third-party data providers to consider compliance with the international standards of the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight core conventions identified in the International Labor Organization Declaration on Fundamental Principles and Rights at Work and the International Bill of Human Rights. Issuers found to have violated these conventions are not considered Sustainable Investments.

(iv) Good Governance

In connection with its assessment of good governance, BlackRock uses data from third-party ESG research providers to initially identify issuers that may not have satisfactory governance practices against key performance indicators (KPIs) related to the criteria described above. When issuers are identified as having potential issues with respect to good governance, the issuers are reviewed to ensure that, when the Investment Adviser/Manager agrees with this external assessment, the Investment Adviser/Manager is satisfied that the issuer has taken remedial action or will take remedial action within a reasonable time based on the Investment Adviser/Manager's direct engagement with the issuer. The Investment Adviser/Manager may also decide to reduce exposure to these issuers. The funds' indirect exposures to issuers with good governance failures are limited to de minimis levels by internal controls and are also periodically monitored to ensure that this indirect exposure remains at de minimis levels.

Other methodologies

In addition, the following methodologies are used to measure compliance with the social or environmental characteristics promoted by the Fund:
1. The Fund uses the MSCI ESG score as a means of assessing issuers' exposure and management of environmental and social risks and opportunities. More details on the MSCI ESG scoring methodology are available at: https://www.msci.com/our-solutions/esg-investing/esg-ratings
2. The Fund measures the greenhouse gas emissions intensity of the portfolio. More details on the methodology for calculating the intensity of greenhouse gas emissions are provided in 'Section C – Environmental or Social Characteristics' above.
3. The Fund applies the BlackRock EMEA Baseline Screens. More details on the BlackRock EMEA Baseline Screens methodology are available at: https://www.blackrock.com/corporate/literature/publication/blackrock-baseline-screens-in-europe-middleeast-and-africa.pdf
4. The Fund applies a set of exclusion screens. More details on the exclusion screen methodology are provided in 'Section C – Environmental or Social Characteristics' above.

The Fund, through the environmental and/or social characteristics of its strategy, was evaluated considering a set of main adverse impact indicators (PAIs), as defined in the SFDR Regulatory Technical Standards. We assess whether and how they are fully or partially considered and describe how these characteristics map to these PAIs in our pre-contractual and periodic reports.

H. Data sources and processing

data sources

BlackRock portfolio managers have access to research, data, tools and analytics to integrate ESG insights into their investment process. Aladdin is the operating system that connects the data, people and technology needed to manage portfolios in real time, as well as the engine behind BlackRock's ESG reporting and analytics capabilities. BlackRock portfolio managers use Aladdin to make investment decisions, monitor portfolios and access relevant ESG insights that can inform the investment process to achieve the fund's ESG characteristics.

ESG datasets are sourced from third party data providers including but not limited to MSCI, Sustainalytics, Refinitiv, S&P and Clarity AI. These datasets can include ESG core scores, carbon emissions data, business engagement or controversy metrics and have been incorporated into Aladdin tools that are available to portfolio managers and employed in BlackRock's investment strategies. These tools support the entire investment process, from research to portfolio construction and modeling to reporting.

Measures taken to ensure data quality

BlackRock applies a comprehensive due diligence process to evaluate provider offerings with highly targeted methodology reviews and coverage assessments based on the sustainable investment strategy (and the environmental and social characteristics or sustainable objective) of the product. Our process involves both qualitative and quantitative analyzes to assess the adequacy of data products in accordance with applicable regulatory standards.

We assess providers and ESG data in five key areas outlined below:
1. Data Collection: This includes, but is not limited to, assessing the data providers underlying the data sources, technology used to capture data, process to identify misinformation, and use of machine learning or human data collection approaches. We will also consider planned improvements
2. Data Coverage: Our assessment includes, but is not limited to, the extent to which a data package provides coverage across our universe of issuers and investment asset classes. This will include consideration of the treatment of parent companies and their subsidiaries, as well as the use of estimated data or reported data.
3. Methodology: Our assessment includes, but is not limited to, consideration of third-party provider methodologies employed, including consideration of collection and calculation approaches, alignment with regulatory or industry standards or frameworks, materiality thresholds, and their approach to data gaps .
4. Data Verification: Our assessment will include, but will not be limited to, third-party providers' approaches to verifying collected data and quality assurance processes, including their engagement with issuers
5. Operations: We will assess a variety of aspects of data provider operations, including but not limited to their policies and procedures (including consideration of any conflicts of interest), the size and experience of their data research teams, their training programs and the use of third-party third parties

In addition, BlackRock actively participates in inquiries from relevant providers regarding proposed changes to methodologies as they relate to third-party datasets or index methodologies and sends considered feedback and recommendations to technical teams at data providers. BlackRock generally maintains ongoing engagement with ESG data providers, including index providers, to stay abreast of industry developments.

How data is processed

At BlackRock, our internal processes are focused on providing standardized and consistent high quality data to be used by investment professionals and for transparency and reporting purposes. Data, including ESG data, received through our existing interfaces and then processed through a series of integrity and quality control checks that seek to ensure the data is of high quality before it is made available for use downstream on BlackRock systems and applications, such as Aladdin. BlackRock's integrated technology allows us to compile data about issuers and investments across a range of environmental, social and governance metrics and a variety of data providers and make it available to investment teams and other support and control functions such as asset management. scratchs.

Use of estimated data

BlackRock strives to capture as much of the reported data from companies as possible through third-party data providers, however, industry standards around disclosure frameworks are still evolving, particularly with regard to forward looking indicators. As a result, in certain cases, we rely on estimated measures or proxy data providers to cover our broad universe of investable issuers. Due to the current challenges in the data landscape, while BlackRock relies on a significant amount of estimated data in our investment universe, the levels of which may vary from dataset to dataset, we seek to ensure that the use of estimates is in line with regulatory guidance and that we have the necessary documentation and transparency from data providers about their methodologies. BlackRock recognizes the importance of improving its data quality and coverage and continues to develop the datasets available to its investment professionals and other teams. Where required by local country-level regulations, funds may indicate explicit levels of data coverage.

I. Limitations to methodologies and data

Limitations of the Methodology

Sustainable investing is an evolving space, both in terms of understanding the industry and in terms of regulatory frameworks at a regional and global level. BlackRock continues to monitor developments in the EU's ongoing implementation of its framework for sustainable investment and is looking to evolve its investment methodologies to ensure alignment as the regulatory environment changes. As a result, BlackRock may update these disclosures and the methodologies and data sources used at any time in the future as market practice evolves or more regulatory guidance becomes available.

The UN Sustainable Development Goals and sub-goals are used by BlackRock as a list of environmental and/or social goals. Any valuation will be carried out strictly in accordance with the methodology defined in the Prospectus. Assumptions associated with conventional use of the SDGs are not considered as part of the assessment, including but not limited to applicable geographic limitations and commitments that may be limited by time or scope, such as targets that may only apply to governments .

Limitations regarding data sources are noted below.

data limitations

ESG datasets are constantly changing and improving as disclosure standards, regulatory frameworks and industry practices evolve. BlackRock continues to work with a wide range of market participants to improve data quality.

While each ESG metric may come with its own individual limitations, data limitations can broadly be considered to include but not be limited to:
• Lack of availability of certain ESG metrics due to different reporting and disclosure standards that affect issuers, geographic regions or industries
• Nascent statutory corporate reporting standards in relation to sustainability, leading to differences in the extent to which companies themselves can report against regulatory criteria and therefore some levels of metric coverage may be low
• Inconsistent use and reported versus estimated levels of ESG data from different data providers, obtained over varying time periods, which makes comparability challenging.
• Estimated data, by their nature, may vary from realized values due to assumptions or assumptions employed by data providers.
• Different views or assessments by issuers due to different vendor methodologies or use of subjective criteria
• Most corporate ESG reports and disclosures occur annually and take a significant amount of time to produce, which means that this data is produced with a delay to financial data. There may also be inconsistent data update frequencies across different data providers that incorporate this data into their datasets.
• Data coverage and applicability across asset classes and indicators may vary
• Forward-looking data, such as climate-related targets, can vary significantly from historical and current metrics.

For more information on how the metrics presented with the sustainability indicators are calculated, consult the Fund's annual report.

Sustainable Investments and Environmental and Social Criteria

Sustainable investing and the understanding of sustainability are evolving along with the data environment. Industry participants face challenges in identifying a single metric or set of standardized metrics to provide a complete picture of a company or investment. BlackRock has therefore established a framework for identifying sustainable investments, taking into account regulatory requirements.

BlackRock uses data from third-party vendors to assess whether investments cause significant harm and have good governance practices. There may be some circumstances where data are unavailable, incomplete or inaccurate, in which case fundamental assessments can be undertaken, taking a proportionate approach and using reasonable efforts to identify issues that are likely to have a significant impact. Despite reasonable efforts, information may not always be available, in which case a subjective assessment will be made based on BlackRock's knowledge of the investment or industry. In certain cases, data may reflect actions that issuers may have taken only after the fact and do not reflect all potential instances of significant harm.

J. Due Diligence

BlackRock applies a high standard of due diligence in the selection and ongoing monitoring of investments made by the Fund for compliance with the Fund's investment, liquidity and risk guidelines, as well as sustainability risk and ESG criteria and overall performance. Portfolio Managers are subject to pre- and post-trade controls within the investment platform where funds promote environmental or social characteristics, integrate sustainability into the investment process in a binding manner or have a sustainable investment objective. The Investment Oversight team conducts due diligence with portfolio managers and oversees internal restrictions that may expand the requirements set out in the fund's prospectus. Portfolio Managers also comply with related EMEA policies, including Investment Due Diligence policies that have been updated to integrate sustainability risk. Legal and Compliance have implemented a framework to ensure that relevant policies and procedures are adopted and adhered to by all employees, including Portfolio Managers.

The Investment Adviser integrates sustainability risks into the Fund's investment due diligence process. The Fund's portfolio managers are primarily responsible for considering sustainability risks. They are subject to an oversight structure within the Investment Adviser and BlackRock's risk management function, the RQA group also provides independent analysis of sustainability risks, and the compliance team provides additional oversight and monitors relevant ESG requirements for each fund and the investment restrictions for each fund. The RQA serves as the second line of defense in BlackRock's risk management framework. RQA is responsible for BlackRock's enterprise and investment risk management framework, which includes oversight of sustainability-related investment risks. RQA Investment Risk conducts regular reviews with portfolio managers to ensure that investment teams are informed about relevant sustainability risks, complementing our first-line monitoring and oversight of sustainability considerations across our investment platform. RQA also has a dedicated Sustainability Risk Team that partners with risk and business managers to reinforce this constructive engagement. RQA collaborates with working groups across the Investment Platform and the Aladdin Sustainability Lab to enhance the firm's sustainability toolkit through queries on data, modeling, methodologies and analytics across the firm. In addition, BlackRock makes data related to key adverse impacts available to all portfolio managers and BlackRock integrates consideration of key adverse impacts of investment decisions on sustainability factors into the investment due diligence process. For more information, see 'Section D - Investment Strategy' above.

K. Engagement Policies

the bottom

The Fund does not use engagement as a means of meeting its binding commitments to environmental or social characteristics or sustainable investment objectives.

In general

Engagement with companies in which we invest our clients' assets occurs on many levels within BlackRock.

When engagement is specifically identified by a specific portfolio management team as one of the means by which they seek to demonstrate a commitment to environmental, social and governance issues in the context of SFDR, the methods by which the effectiveness of such engagement policy and the ways in which such an engagement policy could be adapted in the event that it does not achieve the desired impact (generally expressed as a reduction in specified key adverse indicators) would be described in the prospectus and website disclosures specific to that fund.

When investment teams choose to leverage engagement, this can take many forms, but in essence, the portfolio management team would seek to have a regular and ongoing dialogue with executives or directors of engaged investees to promote sound governance and practices. sustainable business practices targeted at the identified ESG characteristics and key adverse indicators, as well as to understand the effectiveness of the company's management and oversight activities aimed at addressing the identified ESG issues. Engagement also allows the portfolio management team to provide feedback on company practices and disclosures.

When a relevant portfolio management team has concerns about a company's approach to identified ESG characteristics and/or key adverse indicators, they may choose to explain their expectations to the company's board or management and may signal through voting at general meetings who have outstanding concerns, often voting against the re-election of directors who they believe bear responsibility for improvements in identified ESG characteristics or key adverse indicators.

Separated from the activities of any specific portfolio management team, at the highest level, as part of its fiduciary approach, BlackRock has determined that it is in the long-term interest of its clients to promote sound corporate governance as an informed and engaged shareholder. At BlackRock, this is the responsibility of BlackRock Investment Stewardship. Primarily through the work of the BIS team, BlackRock meets the requirements of the Shareholders' Rights Directive II (“SRD II”) related to engagement with public companies and other parties in the investment ecosystem. A copy of BlackRock's SRD II Engagement Policy can be found at https://www.blackrock.com/corporate/literature/publication/blk-shareholder-rights-directiveii-engagement-policy-2022.pdf.

BlackRock's approach to investment management is outlined in the BIS Global Principles and market-level voting guidelines. The BIS Global Principles set out our management philosophy and our views on corporate governance and sustainable business practices that support companies' long-term value creation. We recognize that accepted standards and norms of corporate governance differ across markets; however, we believe that there are certain fundamental elements of governance practice that are intrinsic to a company's ability to create long-term value globally. Our market-specific voting guidelines provide details on how the BIS implements the Global Principles – taking into account local market standards and norms – and inform our voting decisions regarding specific voting items for shareholders' meetings. BlackRock's general approach to investment management and engagement can be found at: https://www.blackrock.com/uk/professionals/solutions/shareholder-rights-directive and https://www.blackrock.com/corporate/ about-us /investment management

By making its commitment, BIS can focus on specific ESG themes, outlined in the BlackRock voting priorities https://www.blackrock.com/corporate/literature/publication/blk-stewardship-priorities-final.pdf

L. Designated benchmark benchmark

There is no specific index designated as a benchmark to determine whether this financial product is in line with the environmental and/or social characteristics it promotes. However, please note that the 50% MSCI World Index, 50% Bloomberg Global Aggregate Bond Index Hedged to EUR serves to compare certain ESG features promoted by the Fund.