With pressing issues in the ESG space, investors must separate fact from fiction.
In the upcoming webcast, Beyond the Backlash: Why ESG Matters More Than Ever, Michael Andeberhan, ESG Investment Strategist, State Street Global Advisors; and Michael Arone, Chief Investment Strategist, State Street Global Advisors, will highlight strategies to help investors capitalize on the potential benefits of environmental, social and governance investing in the current market.
For example, the SPDR S&P 500 ESG ETF (EFIV) focuses on the environmental aspect of ESG, along with sustainability across the social and governance practices of the companies it invests in. The fund tracks the S&P 500 ESG Index, which selects from top companies that meet ESG criteria within the S&P 500 while also adhering to the sector weights of the S&P 500 Index.
The ETF utilizes SPDJI ESG scores to rank companies based on their sustainability. This score is derived from analyzing a thousand data points covering various topics collected from companies and then asking roughly 120 questions. EFIV also excludes tobacco and controversial weapons companies, those that generate power from coal or derive 5% or more of their revenues from thermal coal extraction, and companies that score low on the United Nations Global Compact standards.
Investors seeking to cut exposure to fossil fuels in their investments can turn to something like the SPDR S&P 500 Fossil Fuel Reserves Free ETF (SPYX). The investment is a core allocation to the large-cap equities of the S&P 500, except with a much-reduced carbon footprint. SPYX tracks the S&P 500 Fossil Fuel Free Index, a benchmark of companies within the S&P 500 that are “fossil fuel free,” defined as companies that don’t own fossil fuel reserves (thermal coal reserves and coal reserve byproducts, as well as oil or gas reserves).
Additionally, the more recently launched SPDR MSCI USA Climate Paris Aligned ETF (NZUS) tracks the MSCI USA Climate Paris Aligned Index and focuses on companies that are engaged in addressing the risks of climate change and the low-carbon transition. A primary objective of the MSCI USA Climate Paris Aligned Index is to exceed the standards set forth by the Paris-Aligned Benchmark protocols.
Financial advisors who are interested in learning more about ESG investments can register for the Friday, September 16 webcast here.