Alternative Investments/ESG: Four New Climate-Focused ESG ETFs From FlexShares

Two of the new ETFs are equity-based, while the other two provide fixed income exposure.

FlexShares Exchange Traded Funds from Northern Trust Asset Management have launched a new suite of climate-focused ESG ETFs that help investors improve their portfolio’s overall ESG score and reduce carbon risk, while maintaining core equity and fixed-income exposure. (BusinessWire)

FlexShares’ new ESG ETFs

The four new ETFs utilize the Northern Trust ESG Vector Score as well as a carbon risk rating in an effort to hedge ESG-related risks and capitalize on sustainable opportunities. The new ETFs are:

  • FlexShares ESG & Climate US Large Cap Core Index Fund (NYSE: FEUS)
  • FlexShares ESG & Climate Developed Markets ex-US Core Index Fund (NYSE: FEDM)
  • FlexShares ESG & Climate Investment Grade Corporate Core Index Fund (NYSE: FEIG)
  • FlexShares ESG & Climate High Yield Corporate Core Index Fund (NYSE: FEHY)

“The combination of our ESG Vector Score and carbon risk rating creates a complementary strategy to identify sustainability leaders and laggards in each sector in a consistent way,” said Christopher Huemmer, Senior Investment Strategist. “In response to heightened client demand for climate investing, we created this new suite to offer core investing strategies that we believe are better positioned to benefit from the ongoing transition to a low-carbon economy.”

To examine carbon risk, each company is examined using a carbon risk rating methodology to determine its current carbon emissions, its efforts to reduce its carbon footprint, and its potential exposure to carbon risk relative to other companies in its industry.

Using these ratings, each strategy in the suite targets a reduction in aggregate carbon emissions and carbon reserves relative to its parent index, while also targeting an overall improvement in its carbon risk rating.

The new ETFs join FlexShares’ existing ESG ETF offerings, the STOXX US ESG Select Index Fund (ESG) and the STOXX Global ESG Select Index Fund (ESGG).

Related Story: Northern Trust Launches New ETFs In Europe

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