Invesco has launched a range of Paris-Aligned Benchmark (PAB) climate ETFs that incorporate environmental, social and governance (ESG) criteria.
The four ETFs are:
- Invesco MSCI World ESG Climate Paris Aligned UCITS ETF (PAWD)
- Invesco MSCI USA ESG Climate Paris Aligned UCITS ETF (PAUS)
- Invesco MSCI Europe ESG Climate Paris Aligned UCITS ETF (PAES)
- Invesco MSCI Japan ESG Climate Paris Aligned UCITS ETF (PAJP)
They are listed on the London Stock Exchange with total expense ratios (TERs) ranging between 0.09% and 0.19%.
The firm said it plans to add an emerging markets ETF to the range in the coming weeks.
Tracking the respective exposure of the MSCI ESG Climate Paris Aligned Benchmark Select index, the ETFs looks to reduce exposure to transition and physical climate risks and align with the Paris Agreement requirements.
ETFs linked to the PAB target a carbon intensity reduction of at least 50% relative to the investment universe as well as an annual decarbonisation target of at least 7%.
Furthermore, each ETF applies a broad set of exclusions while the remaining constituents are weighted to ensure the highest exposure to climate transition opportunities and to minimise the tracking error relative to the parent indices.
Gary Buxton (pictured), head of EMEA ETFs and indexed strategies at Invesco, said: “As world leaders initiate plans to slow global warming, companies are key to success. They will need to reduce their carbon footprints while many will also create products and services to help us all improve ours.
“This range of ETFs offer investors an efficient way to focus on companies with lower climate-related risks and positive exposure to the transition while meeting broader ESG objectives.”
Christopher Mellor, head of EMEA equity and commodity ETF product management at Invesco, added: “Responsible investors are not all the same, and we are creating a range of solutions to meet different objectives and investor priorities.
“These ETFs aim to strike a balance between specific climate and broader ESG objectives, with a risk-return profile that most investors would expect from a core portfolio holding.”
Earlier this week, Mellor told ETF Stream combining ESG metrics with the EU’s climate benchmarks is currently an area underserved by ETF issuers.
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