Financial services company UBS Asset Management introduces a line of sustainable equity exchange-traded funds (ETFs).
UBS Asset Management has entered the sustainability-focused ETF market with a new product family based on the MSCI ESG Universal Low Carbon Select indices. These indices aim to provide a lower carbon footprint compared to their respective benchmarks due to targeted climate-related exclusions and an innovative weighting scheme.
The MSCI ESG Universal Low Carbon Select indices focus on low carbon exposure and strong ESG integration. They achieve this by applying climate-related exclusions, filtering out companies with significant carbon emissions or exposure to fossil fuel activities. Additionally, these indices exclude approximately the worst-rated 20% in ESG terms, ensuring a strong sustainability profile in the underlying holdings.
These ETFs fall under the EU Disclosure Regulation (Sustainable Finance Disclosure Regulation - SFDR) framework as Article 8 funds. This classification indicates that they promote environmental and social characteristics but do not have sustainable investment as their core objective. This classification also imposes transparency requirements on how ESG factors and climate-related exclusions are integrated into the investment process.
Dag Rodewald, Head of ETF & Index Fund Sales Germany & Austria at UBS Asset Management, explains the new ETF product family. "We are excited to launch this innovative solution for sustainable investing," he said. "Our new ETFs provide a broad and diversified investment universe while aligning with our commitment to climate-conscious investment solutions."
The new ETF product family is designed for investors who want to take a first step towards sustainable investing. Sectors such as nuclear weapons, civilian firearms, tobacco, thermal coal, and the extraction of fossil fuels are not considered for these indices. Companies with an MSCI ESG rating of "CCC", the lowest ESG rating, are removed from the investable universe.
UBS Asset Management has implemented a filter that excludes the 5% of companies with the worst carbon footprint. The new approach for these indices includes an enhanced system with values-based exclusions.
The new ETF product family from UBS Asset Management expands their existing range of sustainable products, demonstrating their commitment to providing a variety of options for investors seeking sustainable and climate-conscious investment solutions.
[1] For more information, please refer to the detailed product specification on related UBS ETFs incorporating ESG and climate exclusions in fixed income, which illustrate the approach taken by UBS Asset Management in this new product family.
- The new ETF product family from UBS Asset Management, based on the MSCI ESG Universal Low Carbon Select indices, focuses on environmental science by implementing climate-change related exclusions and a strong ESG integration.
- Other than sectors like nuclear weapons, civilian firearms, tobacco, thermal coal, and the extraction of fossil fuels, these ETFs also exclude approximately the worst-rated 20% in ESG terms, illustrating a dedication to promoting sustainable finance and investing.
- Investors can diversify their portfolio while aligning with climate-conscious investment solutions, as UBS Asset Management has also implemented a filter that excludes the 5% of companies with the worst carbon footprint, thus adding a technology focus to the investing process through innovative weighting schemes and values-based exclusions.
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