DWS has launched a new Xtrackers ETF based on European Nordic equity markets, aligned with the goals of the 2015 Paris Climate Agreement. Including the new ETF, DWS writes that it has already launched seven equity ETFs based on the same index methodology, providing exposure to the following equity markets: Global industrial and emerging markets, USA, Japan, Europe, Eurozone and now Nordics.
The Xtrackers Nordic Net Zero Pathway Paris Aligned UCITS ETF will approach EUR100million of assets as committed by investors and is listed on Deutsche Boerse and the London Stock Exchange. The ETF aims to reduce emissions in line with the objectives of the Paris Agreement, with the underlying index therefore corresponding to EU Paris Aligned Benchmark (PAB) regulations. Specifically, the ETF tracks the Solactive ISS ESG Nordic Net Zero Pathway Index. The index aims to represent companies that comply with the regulations of the EU Paris-Aligned Benchmarks (EU PAB).
The index provides a 50 per cent reduction in carbon intensity versus the corresponding non-ESG market benchmark, and a 7 per cent year-on-year ongoing decarbonisation pathway. In addition, the series takes into consideration the recommendations of the Net Zero Investment Framework from the IIGCC (Institutional Investors Group on Climate Change), reweighting 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 index members are overweighted through three distinct pillars: adoption of science-based targets, high climate disclosure standards, and mitigating climate change via ‘green’ revenues. Climate metrics are therefore the primary determinant of index member weighting.
“The new ETF further underlines Xtrackers’ commitment to the Nordic region und reflects the strong demand for climate focused exposure from Nordic investors. We have worked closely with the investment team of Fellesordningen for AFP in developing this index to meet the requirements for a well-diversified index still maintaining similarities to traditional core Nordic benchmarks”, says Peter Lidblom, Head of Xtrackers Nordic.
“It has been a great collaboration over the past months with Xtrackers in developing this index solution combining the focus on Nordic equities and specific emission reduction targets”, says Eirik Hauge, Senior Portfolio Manager at Fellesordningen for AFP.