UBS tracks CTB-aligned Solactive Index for Launch of its First Climate Aware ETF
Climate-aware investing grows in importance as both institutional and retail investors increasingly aim to reduce the carbon emissions of their portfolios. With its new UBS Climate Aware Global Developed Equity CTB UCITS ETF, UBS grants investors access to an investment opportunity to effectively reduce their portfolios’ carbon footprint by exceeding climate-transition benchmark (CTB) requirements, resulting in a 1.8°C degree portfolio. UBS licensed the Solactive UBS Climate Aware Global Developed Equity CTB Index underlying the ETFs.
The Solactive UBS Climate Aware Global Developed Equity CTB Index follows UBS AM’s Climate Aware framework, which on one hand includes companies with best-in-class climate score, while on the other hand excludes companies that are more passive regarding the migration of climate-conscious business activities. With its CTB-compliance, the index is positioned for the long-term transition to a low-carbon and climate-resilient economy.
To derive its climate score, the Solactive UBS Climate Aware Global Developed Equity CTB Index takes into account fundamental risks and opportunities linked to climate change. This process includes, among others, environmental factors such as a company’s carbon emissions, its renewable energy generation capacity, or its share of revenues resulting from coal mining or generation of energy from coal. Additionally, the index methodology considers a company’s glide path probability and its physical risk. After determining a company’s individual climate score, industry leaders are overweighted while excluding the bottom 30%.
In addition to its climate-centered approach, the Solactive UBS Climate Aware Global Developed Equity CTB Index features a broad ESG screening excluding companies involved in tobacco, controversial and military weapons, firms with United Nations Global Compact violations, and companies exposed to production and energy generation of thermal coal and oil sands.
Barry Gill, Head of Investments, UBS Asset Management, said: “Investors are growing more aware of the effects climate is having on their portfolios. By providing innovative products, such as the Climate Aware ETF, we can enable clients to align their investments with their de-carbonization goals. Our Climate Aware approach is underpinned by our active stewardship program. With a consistent methodology, and growing the pool of assets invested using this framework, we can drive further positive change on behalf of our clients.”
Timo Pfeiffer, Chief Markets Officer at Solactive, comments: “Climate-aware investing is one of investors’ most significant criteria when choosing their investments, and, through political and public initiatives, its importance will grow steadily. With UBS’s new Climate Aware ETF, investors obtain an effective tool to meet their climate and decarbonization goals. With its 1.8°C degrees target, the ETF operates under the 2°C degree threshold, making it not only future-proof but also a viable investment opportunity contributing to a greener future. We are very happy to be chosen as UBS’s index provider for this ETF.”
The UBS Climate Aware Global Developed Equity CTB UCITS ETF started trading on Xetra, Borsa Italiana and SIX Swiss Exchange on March 17th, 2021.