DWS has launched three new Xtrackers ETFs providing exposure to US, European and Japanese equity markets with a focus on ESG (environmental, social and governance) and aligned with the objectives of the Paris Climate Agreement of 2015.
Simon Klein, Global Head of Passive Sales at DWS.
- ETFs provide exposure to the US, European and Japanese equity markets and qualify as Article 9 funds under EU SFDR
- DWS now provides five ETFs oriented towards the Paris Climate Agreement and the recommendations of the IIGCC
- Climate indicators of companies are decisive for overweighting and underweighting in the index
It follows the launch in February this year of two ETFs that use the same index methodology and provide exposure to global equities and to the euro area equity market.
The Xtrackers USA Net Zero Pathway Paris Aligned UCITS ETF, the Xtrackers Europe Net Zero Pathway Paris Aligned UCITS ETF and the Xtrackers Japan Net Zero Pathway Paris Aligned UCITS ETF qualify as Article 9 funds under the EU Sustainable Finance Disclosure Regulation (SFDR). The ETFs aim to reduce emissions in line with the objectives of the Paris Climate Agreement, with the underlying indices therefore corresponding to EU Paris Aligned Benchmark (PAB) regulations. The new ETFs are listed on Deutsche Boerse and the London Stock Exchange, with other exchanges to follow.
The ETFs track Solactive-ISSESG Net Zero Pathway indices, which target a 50% reduction in carbon intensity compared with the equivalent non-ESG market benchmark, as well as a continuous reduction in carbon intensity of 7% year-on-year.
“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,” said Simon Klein, Global Head of Passive Sales at DWS. “The recent CREATE[2] Report has shown that institutional investors are looking for solutions to implement impact investing in their portfolios.”
Notably, the Xtrackers Net Zero Pathway Paris Aligned ETFs not only align with the Paris Climate Agreement but go beyond it, by also taking into account recommendations of the Institutional Investors Group on Climate Change (IIGCC), as defined by its Net Zero Investment Framework Implementation Guide. This means the indices not only weight the index members according to their carbon intensity, as recommended by the IIGCC, but also by their commitment to Science Based Target Initiative (SBTI) and Task Force on Climate-related Financial Disclosures (TCFD) reporting standards, as well as measures of ‘green’ revenues.
Overweighting of companies in the indices is based on the extent of adoption of science-based targets, high standards for climate reporting and efforts to mitigate climate change. The indices also use criteria aligned with the United Nations Sustainable Development Goals (SDGs), both in terms of compliance with the principle of ‘Do no significant harm’ and the valuation of ‘green’ sales.
The three new ETFs have competitive annual all-in fees of 0.10% to 0.15% and are designed with the aim of achieving moderate tracking error compared with relevant traditional indices.
Product Table
| Xtrackers USA Net Zero Pathway Paris Aligned UCITS ETF | Xtrackers Europe Net Zero Pathway Paris Aligned UCITS ETF | Xtrackers Japan Net Zero Pathway Paris Aligned UCITS ETF | |
| ISIN | IE0002ZM3JI1 | IE0001JH5CB4 | IE00074JLU02 |
| Ticker | XNUS | XEPA | XNJP |
| TER | 0,10% | 0,15% | 0,15% |
| Underlying Index | Solactive ISS ESG United States Net Zero Pathway | Solactive ISS ESG Developed Markets Europe Net Zero Pathway | Solactive ISS ESG Japan Net Zero Pathway |
| Use of Income | Accumulating | Accumulating | Accumulating |
| Share class Currency | USD | EUR | USD |
Source: ETFWorld.co.uk
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