ETF issuer WisdomTree has expanded its thematic equity ETF product range with the launch of WisdomTree Recycling Decarbonisation UCITS ETF (WRCY).
Listed on the London Stock Exchange, Börse Xetra and Borsa Italiana, WRCY seeks to track the price and yield performance, before fees and expenses, of the Tortoise Recycling Decarbonization UCITS Index and has a total expense ratio of 0.45 per cent.
The index is designed to track the performance of global companies involved in waste-to-energy and recycling technologies as part of the global decarbonisation megatrend and that meet WisdomTree’s ESG criteria.
The firm writes that waste-to-energy is the process of generating energy from waste such as garbage, animal manure, agriculture products and/or animal fats. This, in turn, generates renewable natural gas and diesel used to generate electricity and/or as a transportation fuel for compressed natural gas cars (RNG) and/or diesel (RND) to fuel trucks. RND produces 50 per cent to 80 per cent less greenhouse gas emissions (GHG) than conventional diesel and RNG can produce negative emissions if methane collected from waste that usually is emitted into the atmosphere and is used as replacement for higher emitting energy products such as gasoline.
The ETF is classified as an Article 9 fund under the Sustainable Finance Disclosure Regulation (SFDR). Index constituents are selected and weighted based on their revenue exposure to the themes and carbon emission reporting status, such that companies reporting negative carbon emissions having 2x higher weights than the positive carbon or non-reporting ones.
Christopher Gannatti, Global Head of Research, WisdomTree, says: “Reducing the speed and effects of climate change is one of the greatest challenges facing humanity today. Moving to renewable and sustainable sources of energy is fundamental to our ability to limit greenhouse gas emissions and keep global warming below two degrees Celsius above pre-industrial levels. Current methods of decarbonisation require further investment to make the desired impact but innovative solutions like waste-to-energy and carbon recycling represent new investable themes that can make a difference today.”
The global decarbonisation megatrend targets reducing 50 billion tons of annual global GHG emissions to net-zero. At present natural gas, solar, and wind will displace coal to generate electricity, electric vehicles (EVs) will replace internal combustion engines in the transportation sector, and waste-to-energy investments in renewable natural gas are already reducing emissions. To achieve the net-zero target, future decarbonising technologies such as energy storage (batteries), hydrogen, and carbon capture and sequestration (CCUS) are expected to be needed.
In developing WRCY, WisdomTree leveraged insights from TortoiseEcofin, an energy infrastructure and sustainability expert. TortoiseEcofin, founded in 2002, focuses on essential assets—those assets and services that are indispensable to the economy and society. The firm has expertise in sectors including Energy & Power Infrastructure, Climate Action, Water & Environment, and Social Impact. As of 28 February 2022, TortoiseEcofin reported USD9.5 billion in assets under management.
Alexis Marinof, Head of Europe, WisdomTree, says: “WRCY is the world’s first ETF focused solely on recycling and decarbonisation, representing a big step forward for the industry as thematic ETFs continue to attract the interest of European investors looking for long-term growth opportunities. Our approach to launching thematic ETFs is focused on leveraging the in-depth market intelligence that only specialist sector experts like TortoiseEcofin can provide. Investors want purity of exposure when investing in themes underpinning structural megatrends and that’s what we deliver in our suite of thematic ETFs.”