DWS has become the latest issuer to enter the Paris-aligned climate ETF space with the launch of two ESG strategies.
The Xtrackers EMU Net Zero Pathway Paris Aligned UCITS ETF (XNZE) and the Xtrackers World Net Zero Pathway Paris Aligned UCITS ETF (XNZW) are listed on the Deutsche Boerse with listings on the London Stock Exchange and Borsa Italiana to follow.
The ETFs track the Solactive ISS ESG Net Zero Pathway indices. XNZW has a total expense ratio (TER) of 0.15% while XNZW charges 0.19%.
According to DWS, they are the first PAB ETFs to implement practical recommendations of the Institutional Investors Group on Climate Change (IIGCC).
As a result, the indices will reweight components according to carbon intensity and their commitment to the Science based Target Initiative (SBTI) and the Task Force on Climate-related Financial Disclosures (TCFD) reporting standards.
Companies will be overweighted based on three criteria, the adoption of science-based targets, high climate disclosures standards and mitigating climate changes.
They will also be aligned to the UN Sustainable Development goals via the ‘do no significant harm’ principle and their assessment of green revenues.
The indices provide a 50% reduction in carbon intensity versus the parent benchmark and a 7% ongoing annual decarbonisation pathway. Both ETFs are classified as Article 9 under the Sustainable Financial Disclosure Regulation (SFDR).
Commenting on the launches, Simon Klein, global head of passive sales at DWS, said: “These are the first Paris Aligned Benchmark ETFs to implement the recommendations from the IIGCC and as such, serve the needs of investors who increasingly want to align their investment portfolios with ambitious climate targets but also play an active role in bringing about change at the corporate level.”
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