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Franklin Templeton launches new emerging markets Paris-aligned climate ETF for European investors


Franklin Templeton has announced the launch of its new Franklin MSCI Emerging Markets Paris Aligned Climate UCITS ETF within its Franklin Templeton ETF range. The firm writes that this sustainable ETF is classified as Article 82 under EU SFDR (Sustainable Finance Disclosure Regulation) and is the fourth Paris Aligned Climate ETF in the firm’s range, joining its China, Europe and US funds.

The new ETF will track the MSCI Emerging Markets Climate Paris Aligned Index, an EU Climate Benchmark Index and will include large and mid-cap stocks across 24 emerging markets that are transitioning to a low carbon economy. It is designed to support investors seeking to reduce exposure to physical climate risks whilst pursuing opportunities arising from the Paris Climate Agreement decarbonisation goals.

The Franklin MSCI Emerging Markets Paris Aligned Climate UCITS ETF3 will list on the Deutsche Börse Xetra (XETRA) on 10th March and Borsa Italiana and London Stock Exchange (LSE) on 14th March. The fund will also be registered in Austria, Denmark, Finland, France, Germany, Ireland, Italy, Spain, Sweden and the UK.

Caroline Baron, Head of ETF Distribution, EMEA, Franklin Templeton, says: “We are delighted to add this new ETF to our comprehensive suite of Paris Aligned Climate ETFs, which will help investors across Europe transition their assets in line with the Paris Accord. Providing access to distinct opportunities in emerging markets at a competitive fee, this ETF reduces climate risk exposure by investing in companies providing solutions to mitigate climate change as well as those improving their resilience to its consequences, giving them a long-term competitive advantage.”

“With global temperatures on the rise and massive investment needed to reduce carbon emissions amid today’s rising energy needs, emerging markets play an important role in achieving net zero. We believe this new ETF can be a core sustainable investment solution for those looking to tap into this exciting growth story.”  

Competitive fees

The firm writes that with a total expense ratio (TER4) of 0.18 per cent, a competitive fee for its respective category in Europe, the new ETF will provide European investors with a cost-efficient, UCITS-compliant, equity exposure to large and mid-capitalisation stocks in emerging markets pursuing decarbonisation opportunities.

Rafaelle Lennox, Head of UCITS ETF Product Strategy, Franklin Templeton, says: “Just like our first Paris Aligned ETFs that we launched in 2020, we have selected a key EM benchmark utilised by our clients, MSCI Emerging Markets Index. With this ETF tracking the MSCI Emerging Market Climate Paris Aligned Index, our investors will be able to align their core Emerging Market equity holdings to the Paris Climate Agreement, and thus reduce their exposure to climate change risks as well as capture opportunities related to low carbon transition. Furthermore, by partnering with MSCI’s leading carbon data specialists, this sustainable ETF leverages the latest scientific research to provide a more insightful and robust assessment of climate-related risks and opportunities, both today and in the future.”

This ETF will be managed by Dina Ting, Head of Global Index Portfolio Management, and Lorenzo Crosato, ETF Portfolio Manager, at Franklin Templeton, who have more than three decades of combined experience in the asset management industry and extensive track records in managing ETF strategies.

Ting says: “The EU Action Plan has three main objectives to drive the EU transition to a green economy, namely – reorienting capital flows towards sustainable investment, mainstreaming sustainability into risk management and fostering transparency and long-termism. This will require significant investment in infrastructure, energy and technology. An estimated EUR180 billion of additional investment will be needed each year to achieve 1.5ºC scenario. Our Article 8 ETF enables European investors to take part in this significant opportunity and further deepens Franklin Templeton’s wide range of sustainable products.”

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