DWS writes that with the Xtrackers MSCI Emerging Markets Climate Transition UCITS ETF, DWS complements its range of listed index funds that fulfil the EU requirements for climate transition benchmarks (CTB). These are part of the EU Sustainable Finance Action Plan to promote investment in companies with lower CO2 emissions. The new Xtrackers ETF, which focuses on selected companies in emerging markets, is listed on the German Stock Exchange and the London Stock Exchange on 1 November.
The ETF uses an index that corresponds to the EU reference standard Climate Transition Benchmark (CTB). Specifically, it tracks the MSCI Emerging Markets Select Sustainability Screened CTB Net Index. In line with the objectives of the EU benchmark CTB, this index aims to achieve a 30 per cent reduction in carbon intensity compared to a corresponding traditional market index and a continuous reduction in carbon intensity of seven per cent per year. The Climate Transition Benchmarks are part of the same EU regulation as the Paris Aligned Benchmarks (PAB). These aim to achieve a greater reduction in carbon intensity of 50 per cent compared to the traditional market index.
DWS writes that the range of Xtrackers MSCI Climate Transition UCITS ETFs already includes products that cover the US, Europe, eurozone, Japan and global regions. Like the new ETF, they also address the indicators for measuring the so-called Principal Adverse Impacts (PAIs) through the construction of their respective index. PAIs were introduced in the EU regulation on the disclosure of information on sustainable finance. The regulation requires financial companies to provide regular information on the principal adverse impacts of the companies in which they invest. In Xtrackers’ Climate Transition ETFs, 8 out of 14 of these indicators are explicitly taken into account by the index methodology – for example by excluding those companies that jeopardise biodiversity the most through land consumption.
“The new Xtrackers ETF expands DWS’s investment solutions, which are orientated towards the EU climate targets, to include the emerging markets region. It enables a broadly diversified investment across companies and sectors with significantly lower CO2 emissions compared to the benchmark index,” says Simon Klein, Global Head of Xtrackers Sales at DWS.