All federal agencies were issued directions in January by President Biden to prepare plans for climate change that would identify the impacts of a warming world on their operations and what steps the agency would take to help mitigate those impacts. The USDA released their plans on October 7th that outlined what the threats were as well as how it would work to lessen the consequences of climate change.
The plan breaks down the threats to the USDA and stakeholders into five main categories and then outlines five major responses the agency will have as part of the concentrated federal response to global warming.
“Not only does climate change have a direct impact on a producer’s ability to plan and manage risk, it has wider impacts on the natural systems we rely on to support production of food and fiber, keep our waters clean, and maintain cultural resources,” said USDA Secretary Tom Vilsack in the report.
Threats that the USDA deems as most critical include decreased agricultural productivity from changing temperature and weather, threats to water systems that include quantity and quality brought on by changes to the water cycle, and the disproportionate impact that climate change will have on vulnerable communities. Other primary challenges include the generalized shock to systems from extreme climate events such as wildfires and hurricanes, and the stress that climate change will have on infrastructure and public lands.
The response by the USDA to help mitigate impacts includes helping to build resiliency with conservation practices, promoting the “adoption and application of climate-smart adaptation strategies,” which include green technologies, making climate data more readily available to stakeholders, helping to support the research and development of new technologies and practices that are “climate-smart,” and other best practices that will help to educate and disseminate information.
ESG Investing With SPDR
Climate control and mitigating global warming are major focuses and concerns of regulatory agencies, governments, and investors. For investors that are looking to gain exposure to companies through an ESG lens, State Street Global Investors offers several options.
One such option is the SPDR S&P 500 ESG ETF (EFIV), which takes a holistic approach to ESG investing by not only focusing on the environmental aspect of ESG, but on sustainability across the social and governance practices of the companies it invests in as well.
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.
EFIV utilizes SPDJI ESG scores to rank companies based on their sustainability. This score is derived from analyzing a thousand data points covering a variety of topics collected from companies and then asking roughly 120 questions, according to the S&P Global website.
EFIV excludes companies involved in tobacco and controversial weapons, those that derive 5% or greater of their revenues from thermal coal extraction or generate power from coal, or that score low on the United Nations Global Compact standards.
The ETF’s top three sector allocations include 30.57% in information technology, 14.61% in consumer discretionary, and 12.15% in healthcare, as well as several other smaller allocations.
EFIV has an expense ratio of 0.10%, making it one of the cheapest ESG ETFs on the market.
For more news, information, and strategy, visit the ESG Channel.