Not many in the capital markets would’ve figured that Covid-19 would be the catalyst for environmental, social, and governance (ESG) investing in 2020. ESG outperformance relative to the broad market was an astounding feet. A Foreign Policy article noted how portfolios with an emphasis on sustainability metrics did just that.

“Before COVID-19 took the world in its grip a year ago, the tailwinds behind the global sustainability movement was already pushing its skeptics into a corner,” the article said. “Global finance’s emphasis on environmental, social, and governance (ESG) criteria as a means of valuing companies, real estate, and investment performances was going mainstream, with climate risks being adopted by insurers, regulators eying the gender and racial makeup of corporate boards, and skeptics sounding a lot like those who once insisted the moon was made of Swiss cheese.”

“Studies consistently showed portfolios heavy with firms that scored well on sustainability metrics were outperforming expectations,” the article added.

A Clean Energy ETF to Consider

ETF investors looking at the ESG space can check out the SPDR S&P Kensho Clean Power ETF (CNRG). CNRG seeks to provide investment results that correspond generally to the total return performance of the S&P Kensho Clean Power Index. Under normal market conditions, the fund generally invests at least 80% of its total assets in the securities comprising the index, which is designed to capture companies whose products and services are driving innovation behind clean power.

The fund may invest in equity securities that are not included in the index, cash and cash equivalents, or money market instruments, such as repurchase agreements and money market funds. One of the highlights of CNRG is its low expense ratio (0.45%) relative to other funds within its category.

The CNRG ETF:

  • Seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Kensho Clean Power Index.
  • Seeks to track an index utilizing artificial intelligence and a quantitative weighting methodology to capture companies whose products and services are driving innovation behind the clean energy sector, which includes the areas of solar, wind, geothermal, and hydroelectric power.
  • Provides ETF investors an effective way to pursue long-term growth potential by investing in a portfolio of companies involved in the transition to lower emission generating power supply.

CNRG Chart

For more news and information, visit the ESG Channel.