Investing in Cleaner Oceans on World Water Day | ETF Trends

World Water Day is March 22 every year and was created to bring awareness to the 2 billion people who do not have access to clean, safe water. This year’s focus is on groundwater and working to sustainably manage and protect the source of almost all fresh water globally.

“Pressure on water resources is increasing due to overuse, pollution and climate change. Droughts and heatwaves are becoming more intense and more frequent. Sea-level rise is driving salt-water intrusion into coastal aquifers. Groundwater aquifers are being depleted,” said António Guterres, the UN Secretary-General in a message for World Water Day 2022.

Groundwater pollution can take long timelines to recover from and by working to reduce pollution across the entire water supply chain, from sources that are polluting groundwater to those contributing to ocean pollutants, quality of both water and life will be improved for everyone.

“Water can be a source of conflict but also of cooperation. It is essential that we work together to provide better stewardship of all water sources, including the world’s supply of groundwater,” Guterres said.

The health of the oceans is vital to curtailing climate change, and when the health of the oceans is bettered, the entire water cycle is improved. The IQ Clean Oceans ETF (OCEN) invests in the blue economy, which is estimated to be worth roughly $2.5 trillion annually and is anticipated to grow twice as fast as the mainstream economy by 2030.

OCEN seeks to track the IQ Candriam Clean Oceans Index, which offers exposure to companies involved in pollution reduction, carbon efficiency, clean energy, sustainable oceans, or cleaner shipping. These companies offer products or services that work to protect the oceans or promote cleaner oceans, use products or services that accomplish those goals, or else engage in activities that have ocean-related sustainability goals. Companies are not required to be primarily or directly engaged in these activities.

The index screens for ESG requirements in developed and emerging markets and applies an exclusionary screen monthly for companies that don’t comply with the UN Global Compact. The index includes companies of all market caps and utilizes a thematic score based on revenue and impact score to rank the companies it holds. Securities are weighted using a modified market cap-weighted methodology with a minimum weight of 0.25% and a maximum weight of 3% at its quarterly rebalances.

OCEN carries an expense ratio of 0.45% and currently has 80 holdings.

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