Use USNZ To Help Meet Paris Agreement Targets | ETF Trends

At the 2015 Paris Climate Accord, more than 190 countries agreed to make sure global warming stays “well below” 2 degrees Celsius and to “pursue efforts” to limit the temperature rise to 1.5 degrees Celsius. Now, seven years later, how is the world doing to maintain its these targets? Unfortunately, not great.

“The world is not on track to meet its international climate targets, more than seven years since participants in the Paris Agreement pledged to keep global warming well below 2 degrees Celsius and under 1.5 C if at all possible,” wrote Chelsea Harvey at Scientific American. “Both targets are swiftly approaching, and humanity could blow past the 1.5 C threshold within a decade or so.”

The reason for this isn’t just because world nations aren’t reducing their carbon emissions fast enough. They’re also not removing enough carbon dioxide from the air. According to a report led by the University of Oxford’s Smith School of Enterprise and the Environment, the amount of carbon removal currently planned or deployed globally is inconsistent with what’s required to meet Paris Agreement targets.

“Scaling up Carbon Dioxide Removal (CDR) is an urgent priority, as are efforts to rapidly reduce emissions, if we are to meet the temperature goal of the Paris Agreement,” according to the report. “We find a gap between how much CDR countries are planning and what is needed in scenarios to meet the Paris temperature goal. The size of the ‘CDR gap’ differs across scenarios, depending on how we choose to transform the global economy towards net-zero emissions. However, there are currently few plans by countries to scale CDR above current levels, exposing a substantial shortfall.”

There are some bright spots, however. One of them is the U.S. Inflation Reduction Act, which includes a record $369 billion in spending on climate and energy policies. At the World Economic Forum in Davos, Switzerland, International Energy Agency Executive Director Fatih Birol called the legislation “the most important climate action after the Paris 2015 agreement.”

Another bright spot is the rise of environmentally responsible investing. A recent study by PwC shows that nearly nine in 10 institutional investors (88%) believe asset managers should be more proactive in developing new ESG investment products.

Investors looking to be on the path to net zero emissions may want to check out the Xtrackers Net Zero Pathway Paris Aligned U.S. Equity ETF (NYSE Arca: USNZ). USNZ provides large- and mid-cap U.S. equity exposure aligned with an internationally recognized framework and is designed to capture the move of the global economy to a net-zero emissions environment.

Launched in June, USNZ is designed to align to transform economies to net zero. It provides exposure to a unique Paris Aligned Benchmark (PAB) index that uses a transparent set of rules aiming to be at the cutting edge of sustainable investment practices.

The index is designed to provide a 50% reduction in carbon intensity versus a market capitalization-weighted U.S. equity index and a carbon intensity reduction trajectory of 7% year-over-year. It provides an evidence-based, statistically driven “pathway” to net zero, aligned with the Paris Climate Accords and their two main objectives: to achieve a net-zero emissions economy by 2050 and limit the rise in global temperature to 1.5°C above pre-industrial levels.

In addition to meeting PAB regulations, the index also aims to comply with recommendations published by the Institutional Investors Group on Climate Change (IIGCC), specifically its Net Zero Investment Framework.

USNZ carries an expense ratio of 0.1%.

For more news, information, and analysis, visit the Global Diversification Channel.