DWS writes that it is expanding its range of sustainable investment products with three new Xtrackers ETFs. The firm writes that its listed index funds offer investors the opportunity to invest in companies in Europe, the US and worldwide that have a lower negative impact on the earth’s ecosystems than the market average.
The Xtrackers Biodiversity Focus SRI UCITS ETFs for the US investment region and the global equity market are on the London Stock Exchange, following the listing of all three ETFs on the Frankfurt Stock Exchange.
The firm writes that biodiversity, the diversity of life on earth, is of great importance not only from an ecological but also from an economic perspective. Studies estimate the global value of ecosystem services – i.e. the benefits that people derive from nature – at between USD125 and 140 trillion per year. The World Economic Forum predicts that the loss of biodiversity will have the third largest negative impact on humanity in the next 10 years after climate change and extreme weather.
DWS writes that it now enables investors to integrate the aspect of biodiversity into their portfolios easily and cost-effectively via ETFs. Specifically, the products track different variants of the ISS STOXX Biodiversity Focus SRI indices. When compiling these indices from a sustainability perspective, additional risks associated with biodiversity are identified and subsequently reduced. They therefore represent an extension of existing ESG indices that take into account environmental, social and governance criteria.
A multi-stage filter is used for each biodiversity index. Firstly, companies whose activities are demonstrably detrimental to biodiversity are excluded from the respective investment universe. These are, for example, producers of palm oil, genetically modified agricultural goods or hazardous pesticides. In the subsequent screening according to the ISS ESG Biodiversity Impact Assessment Tool (BIAT), those companies are identified and excluded that have the strongest negative impact on biodiversity within an economic sector.
The biodiversity and climate-related development goals of the United Nations (Social Development Goals; SDGs) are also taken into account in the selection process. Finally, a filter ensures that the CO2 intensity of the portfolio is reduced by at least 50 per cent compared to the broad market index.
“With the Xtrackers Biodiversity ETFs, investors can transparently reduce the risks associated with the decline in biodiversity for their broadly diversified equity investments. This is an important addition to our range of sustainability-oriented investments,” says Olivier Souliac, Head Indexing Xtrackers Products at DWS.
