State Street Global Advisors, the asset management business of State Street Corporation has launched two SPDR MSCI Climate Paris Aligned ETFs designed to help investors meet their climate objectives.
Climate leader UC Investments (University of California) has provided early stage commitment to funds designed for investors seeking to decarbonise their portfolios.
The funds, SPDR MSCI USA Climate Paris Aligned ETF (NZUS) and SPDR MSCI ACWI Climate Paris Aligned ETF (NZAC), track the MSCI USA Climate Paris Aligned and MSCI ACWI Climate Paris Aligned Indexes and are geared toward the growing number of investors interested in addressing climate change in their portfolios, both to mitigate climate risk and to invest in climate solutions.
As one of the largest research universities in the world, the University of California has been on the forefront of finding solutions to climate change and is on track to becoming carbon neutral by 2025. The university’s investment arm, UC Investments, began shedding its fossil fuel holdings in 2015 and now its USD168 billion portfolio is virtually fossil free.
“Climate change almost certainly will drive significant structural shifts in the global economy, poses new risks to and opportunities for long-term investments, and potentially creates risks to the financial system” says Ron O’Hanley, Chairman & Chief Executive Officer of State Street Corporation. “Our primary focus is on long-term value creation for investors. We apply the insights we gain from working with global institutional investors to our own ESG priorities as a company.”
As previously announced, several fund changes were implemented to the SPDR MSCI ACWI Low Carbon Target ETF (LOWC). The fund’s name and ticker changed to the SPDR MSCI ACWI Climate Paris Aligned ETF (NZAC) and its benchmark became the MSCI ACWI Climate Paris Aligned Index. The fund also underwent a 4:1 stock split and the total expense ratio has been reduced from 20 basis points to 12 basis points.
The Climate Paris Aligned ETFs are core equity exposures that may help investors implement net-zero strategies and address climate change in a holistic manner, the firm writes. The funds track the MSCI USA Climate Paris Aligned and MSCI ACWI Climate Paris Aligned Indexes which are designed to support investors seeking to reduce their exposure to transition and physical climate risks and who wish to pursue opportunities arising from the transition to a lower-carbon economy while aligning with the Paris Agreement requirements.
“Our sustainability framework encompasses the foundational values and principles that guide our investment decisions,” says Jagdeep Singh Bachher, the University of California’s chief investment officer. “As an early stage investor in these new ETFs, we hope to open the door to others who, like us, believe that clean energy will fuel the world’s future and wish to invest in a decarbonized portfolio to improve the risk and return characteristics of their holdings over longer periods of time. We are excited that these funds are being brought to a broad investor base. We believe that investing in climate solutions, not climate problems, will provide superior risk-adjusted returns.”
“The introduction of NZUS and NZAC gives ESG investors more choices on their journey to net zero,” O’Hanley says.