Solactive has announced that DWS has expanded its net-zero ETF range with a new ETF tracking a Solactive index.
The firm writes that after introducing five net-zero ETFs tracking Solactive’s indices this year to the market, DWS launches now an Emerging Market Net Zero Pathway Paris Aligned UCITS ETF (XEMN), which tracks the Solactive ISS ESG Emerging Market Net Zero Pathway Index. The Xtrackers Emerging Market Net Zero Pathway Paris Aligned UCITS ETF follows the same climate reduction targets as the rest of the series. It is listed on the Deutsche Börse and the London Stock Exchange.
The Solactive ISS ESG Emerging Market Net Zero Pathway Index is part of the Solactive ISS ESG Net Zero Pathway Index Series. The series focuses on large and medium-sized companies and aims to represent multiple segments of the global stock market complying with the regulations of the EU Paris-Aligned Benchmarks (EU PAB) as regards the minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks. The indices provide a 50 per cent reduction in carbon intensity versus an equivalent non-ESG market benchmark, and a 7 per cent year-on-year ongoing decarbonisation pathway.
Solactive writes that the series aims to implement recommendations of the Net Zero Investment Framework from the IIGCC (Institutional Investors Group on Climate Change). According to those references, the indices re-weight components according to carbon intensity and to their commitment to the Science Based Target Initiative (SBTI) and Task Force on Climate-related Financial Disclosures (TCFD) reporting standards. The indices overweight companies through three distinct pillars: Adoption of science-based targets, high climate disclosure standards, and mitigating climate change. As a result, climate metrics are the primary driver of active company weights in the indices, the firm says.
The underlying securities include only companies operating in accordance with market standards for responsible business conduct (Norms-Based Research). Those standards are based on established norms such as the United Nations Global Compact and the exclusion of significant involvement in defined sectors. In addition, the securities are screened for their involvement in controversial weapons.
In March, Xtrackers launched two net-zero ETFs tracking Solactive ISS ESG Net Zero Pathway Index Series offering core exposure to eurozone and developed market equities. In September, the company expanded the range with three new products following Solactive’s indices, offering exposure to companies domiciled in industrialised countries in the USA, Europe, or Japan.
Timo Pfeiffer, Chief Markets Officer at Solactive, says: “We are very happy to come to the end of the year with the news of one more expansion of DWS Paris-aligned ETFs. With another ETF tracking our ISS ESG Net Zero Pathway Index Series, investors have options to diversify in various regions keeping their commitment with ESG investing. Therefore, the new product shows our longstanding innovative strengths in ESG indices and reinforces Solactive’s commitment to provide clients with the most seamless and fitting ESG solutions.”
Simon Klein, Global Head of Passive Sales at DWS, says: “With the new ETF, we now offer a full range of products aligned with the Paris Climate Agreement, giving investors suitable solutions for both developed and emerging markets.”