DWS Launches Two Net Zero ETFs Tracking Solactive ISS ESG Net Zero Pathway Index Series
FRANKFURT AM MAIN – ESG has been gaining momentum in the last years, and investors have been increasingly considering aligning their decisions with those values. Solactive is now pleased to announce that DWS has launched two net-zero ETFs tracking Solactive ISS ESG Net Zero Pathway Index Series offering core exposure to eurozone and developed market equities.
The Xtrackers EMU Net Zero Pathway Paris Aligned UCITS ETF and the Xtrackers World Net Zero Pathway Paris Aligned UCITS ETF seek to track, respectively, the Solactive ISS ESG Developed Markets Eurozone Net Zero Pathway Index and the Solactive ISS ESG Developed Markets Net Zero Pathway Index, which constitute the series.
The Solactive ISS ESG Net Zero Pathway Index Series aims to represent multiple segments of the global stock market complying with the regulations of the EU Paris-Aligned Benchmarks (EU PAB) as regards to the minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks. The indices provide a 50% reduction in carbon intensity versus an equivalent non-ESG market benchmark, and a 7% year-on-year ongoing decarbonization pathway.
What is more, the series goes further and pursues to implement recommendations of the Net Zero Investment Framework[1] from the IIGCC (Institutional Investors Group on Climate Change). According to those references, the indices re-weight components according to carbon intensity, their commitment to Science Based Target Initiative (SBTI)[2] and Task Force on Climate-related Financial Disclosures (TCFD) reporting standards[3], and on measures of “green” revenues. The indices overweight companies through three distinct pillars: Adoption of Science Based Targets, high climate disclosures standards and mitigating climate change. As a result climate metrics are the primary driver of company active weight in the indices.
The underlying securities include only companies operating in accordance with market standards for responsible business conduct (Norms-Based Research). Those standards are based on established norms such as the United Nations Global Compact and the exclusion of significant involvement in defined sectors. In addition the securities are screened for their involvement in controversial weapons.
Timo Pfeiffer, Chief Markets Officer at Solactive, comments: “Solactive’s longstanding innovative strengths in ESG indices root from our commitment to provide our clients with the most seamless and fitting ESG solution as well as from our clients’ dedication to offer innovative opportunities for investors to contribute to a greener planet. The ISS ESG Net Zero Pathway Index Series cocoons this joint effort between DWS and us, and represents a step into the next stage of sustainable investing.”
Simon Klein, Head of Passive Sales, DWS, says: “Our new Xtrackers ETFs are designed to take ESG investing to the next level by being aligned with the Paris Agreement, but also put strict climate metrics in the centre of the overall index construction. We are pleased to work once again with Solactive in developing these carbon reduction indices, we see this benchmark to become a new standard for sustainable investment practices .”
[1] The Institutional Investors Group on Climate Change (IIGCC) is the European membership body for investor collaboration on climate change. Its mission is to support the investment community in driving significant progress towards net zero by 2030. https://www.iigcc.org/resource/net-zero-investment-framework-implementation-guide/
[2] The Science Based Targets Initiative SBTI aims to align emissions reductions and net-zero targets in line with climate science.
[3] The Financial Stability Board created the Task Force on Climate-related Financial Disclosures to improve reporting of climate-related financial information.