Invesco has announced the launch of a suite of ETFs that aim to deliver meaningful improvements in overall ESG characteristics together with meeting specific objectives related to the UN-backed Paris Agreement on climate change.
The firm writes that the new ETFs offer a choice of exposure to the USA, Europe, Japan and World equity markets, while the firm plans to add Emerging Markets to the range in the coming weeks.
Gary Buxton, Head of EMEA ETFs and Indexed Strategies at Invesco, says: “As world leaders initiate plans to slow global warming, companies are key to success. They will need to reduce their carbon footprints while many will also create products and services to help us all improve ours. This new range of ETFs offer investors an efficient way to focus on companies with lower climate-related risks and positive exposure to the transition, while meeting broader ESG objectives.”
The Invesco ETFs will follow MSCI indices that aim to reduce exposure to transition and physical climate risks whilst pursuing opportunities arising from the transition to a lower carbon economy while aligning with the Paris Agreement requirements. Each index applies a broad set of exclusions, with the remaining constituents optimised to reduce carbon intensity to a level consistent with a 1.5°C warming pathway, as well as reducing the weighting of companies exposed to climate transition risks, maximising the weighting of companies with the highest exposure to climate transition opportunities and minimising tracking error relative to the standard MSCI index.
Chris Mellor, Head of EMEA Equity and Commodity ETF Product Management at Invesco, says: “We believe these new ETFs offer investors truly differentiated core equity exposure. Responsible investors are not all the same, and we are creating a range of solutions to meet different objectives and investor priorities. These ETFs aim to strike a balance between specific climate and broader ESG objectives, with a risk-return profile that most investors would expect from a core portfolio holding.”
The ETFs will be invested physically in the securities of the respective indices, with Invesco exercising its proxy voting rights and, guided by Invesco’s global ESG team, engaging with investee companies on key ESG-related issues.
These new launches bring the Invesco ESG ETF range to a total of 21 products, with core equity and fixed income funds and thematic exposures to clean energy.