Xtrackers by DWS Launches Three More ETFs Tracking Solactive Net Zero Index Series
ESG has been gaining momentum and investors have been increasingly considering aligning their decisions with those values. After launching two net-zero ETFs tracking Solactive’s indices in March, Xtrackers completed the net zero index range with three more ETFs tracking the Solactive ISS ESG Net Zero Pathway Index Series. The new products – Xtrackers USA Net Zero Pathway Paris Aligned UCITS ETF (XNUS), Xtrackers Europe Net Zero Pathway Paris Aligned UCITS ETF (XEPA), and Xtrackers Japan Net Zero Pathway Paris Aligned UCITS ETF (XNJP) – offer exposure to companies domiciled in industrialized countries respectively in the USA, Europe, or Japan.
The Solactive ISS ESG Net Zero Pathway Index Series focuses on large and medium-sized companies and aims to represent multiple segments of the global stock market complying with the regulations of the EU Paris-Aligned Benchmarks (EU PAB) as regards 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.
Moreover, the series 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 and to their commitment to Science Based Target Initiative (SBTI)[2] and Task Force on Climate-related Financial Disclosures (TCFD) reporting standards[3]. The indices overweight companies through three distinct pillars: Adoption of science-based targets, high climate disclosure 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, commented: “Solactive is committed to providing clients with the most seamless and fitting ESG solutions. The new products tracking the ISS ESG Net Zero Pathway Index Series show our longstanding innovative strengths in ESG indices and cocoons the joint effort between DWS and Solactive to go towards the next stage of sustainable investing, with the full net zero index range.”
Simon Klein, Global Head of Passive Sales at DWS, said: “We see impact investing as one of the major future tasks for asset managers. With the new ETFs, we are expanding our range of climate agreement-oriented ETFs to include important investment regions with a view to performance potential and diversification.”
[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.