Alternative Investments/ESG: State Street Launches Paris-Aligned Emerging Markets Stock ETF

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This is the sixth ETF in the State Street Paris-aligned suite.

State Street Global Advisors (SSGA) has launched a climate-friendly emerging market ETF. The SPDR MSCI Emerging Markets Climate Paris Aligned UCITS ETF (SPF7) is listed on Deutsche Boerse, Borsa Italiana, the London Stock Exchange, and Euronext Amsterdam. (ETF Strategy)

PDR MSCI Emerging Markets Climate Paris Aligned UCITS ETF (SPF7)

Offered with a total expense ratio of 0.23%, the fund seeks to match the performance of the MSCI Emerging Markets Climate Paris Aligned index by investing in large and mid-cap stocks across 24 emerging nations.

The index, which is based on the Task Force on Climate-Related Financial Disclosures (TCFD) requires a 50% reduction in greenhouse gas emissions based on the parent index followed by a seven percent annual reduction.

It excludes securities that derive more than 1% of their revenue from thermal coal mining and extraction, as well as petrochemicals with more than 50% of their sales coming from thermal coal, oil, or natural gas. Companies that are embroiled in severe ESG-related controversies or have business operations linked to weapons, tobacco, thermal coal, oil & gas, and oil sands are also excluded.

The index also aims to achieve secondary objectives such as maximizing exposure to sustainable energy providers, increasing the weight of companies with clear carbon reduction targets, minimizing fossil fuel exposure, reducing climate value-at-risk by 50%, and maintaining a modest tracking error relative to the parent index.

SPF7 is labelled Article 8 under the Sustainable Finance Disclosure Regulation (SFDR) instead of Article 9 which has been the ‘article’ of choice for many issuers when launching climate ETFs.

Related Story: DWS Launches An ESG Eurozone Sovereign Bonds ETF

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