Bringing you live news and features since 2006 

Xtrackers by DWS adds Paris Aligned Benchmark ETFs to ESG offering


DWS writes that it is offering core exposure to eurozone and developed market equities in two next-generation environmental, social and governance (ESG) ETFs aligned with the objectives of the 2015 Paris Climate Accords.

Xtrackers EMU Net Zero Pathway Paris Aligned UCITS ETF and Xtrackers World Net Zero Pathway Paris Aligned UCITS ETF qualify under Article 9 of the EU’s Sustainable Finance Disclosures Regulation (SFDR). The ETFs are based on a framework aimed at reducing emissions in line with the objectives of the Paris Agreement on climate change using indices that are subject to the European Union’s Paris Aligned Benchmark (PAB) regulation. 

The ETF’s underlying Solactive ISS ESG Net Zero Pathway indices provide a 50% reduction in carbon intensity versus an equivalent non-ESG market benchmark, and a 7% year-on-year ongoing decarbonisation pathway.

However, the ETFs aim to go further than this by additionally incorporating recommendations from the Net Zero Investment Framework Implementation Guide of the Institutional Investors Group on Climate Change (IIGCC). That means, according to the IIGCC recommendations the indices re-weight components according to carbon intensity, their commitment to Science Based Target Initiative (SBTI) and Task Force on Climate-related Financial Disclosures (TCFD) reporting standards, and on measures of ‘green’ revenues. The indices overweight companies through three distinct pillars: Adoption of Science Based Targets, high climate disclosures standards and mitigating climate change. As a result climate metrics are the primary driver of company active weight in the indices.

“These are the first Paris Aligned Benchmark ETFs to implement the recommendations from the IIGCC, and as such serve the needs of investors who increasingly want to align their investment portfolios with ambitious climate targets, but also play an active role in bringing about change at the corporate level,” says Simon Klein, DWS’s Global Head of Passive Sales. “By basing Xtrackers Net Zero Pathway ETFs on this robust, engagement-friendly indexing protocol, investors in Xtrackers ETFs can place their actions at the cutting edge of sustainable investment practices.”

The indices make extensive use of alignment assessments benchmarked to the UN Sustainable Development goals, both in the implementation of the ‘do no significant harm’ principle and in their assessment of green revenues.

The ETFs are designed to be competitive, with low annual all-in fees of less than 0.2 per cent, and moderate tracking error against traditional benchmark indices.

Additionally, the IIGCC guide stipulates good practice on engagement and stewardship. DWS is a board member of IIGCC, contributed to the creation of the Net Zero Investment Framework across all asset classes and continue to support IIGCC to develop net zero methodologies. DWS is one of the few major asset managers committed to the Science Basted Target Initiative and was the first German asset manager signatory of the Net Zero Asset Managers initiative.

Latest News

Morningstar has published a review of the European ETF market for the first quarter 2024, which finds that it gathered..
ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..
Adapting product lines to fit into changing methodologies and meet shifting demand is essential to remaining relevant in the industry..

Related Articles

US ETF issuers of active ETFs are facing an increase in fees from the big custodian firms, such as Charles...
Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by