BNP Paribas Asset Management (BNPP AM) has launched a China socially responsible investment (SRI) ETF.
The BNP Paribas Easy MSCI China Select SRI S-Series 10% Capped UCITS ETF (CHINE) is listed on Euronext Paris and Deutsche Boerse with a total expense ratio (TER) of 0.45%, the cheapest of its class on the European market.
Tracking the MSCI Chian Select SRI S-Series 10% Capped index which offers exposure to large and mid-cap Chinese companies with strong ESG ratings.
Starting with the MSCI China as its universe, CHINE takes a best-in-class approach by selecting companies with the highest ESG ratings making up 25% of the market cap in each sector.
Each company is capped at 10% and there is a 40% cap for the sum of companies with a 5% weighting or above.
Is it possible to reconcile China and ESG?
CHINE excludes companies that do not comply with the principles of the United Nations Global Compact or have been involved in ESG-related controversies.
It also removes companies with significant business activities in industries such as thermal coal, nuclear energy, controversial weapons, gambling tobacco, genetically modified organisms and fossil fuels.
This leads to an index of just 90 stocks out of the 736 included in the MSCI China.
There are currently two China equity ESG ETFs available on the European market. The largest is the UBS ETF MSCI China ESG Universal UCITS ETF (CNESG) which has $170m assets under management (AUM) since launch in July 2019 while the KraneShares MSCI China ESG Leaders UCITS ETF (KESG) has $10.4m AUM.
