Impact Shares announced in a press release today the launch of the Impact Shares MSCI Global Climate Select ETF (NTZO). The fund was created by the nonprofit ETF issuer in conjunction with the United Nations Capital Development Fund (UNCDF), an agency within the UN that works financially with the poor in the 46 Least Developed Countries (LDCs) globally.
NTZO invests in companies that would benefit from the reduction of carbon emissions in an economy that is moving away from carbon-producing energy sources, or else have committed to or have already given credible carbon emission reduction goals with a clear track record of reducing CO2 emissions already.
The Global Investors for Sustainable Development (GISD) Alliance was created in 2019 by UN Secretary General António Guterres and is an alliance of 30 of the global business leaders that are working together to bring private finance and investing up to par to reach UN Sustainable Development Goals (SDGs).
“The GISD Alliance was convened to help move money behind the SDGs,” said Investec CEO Fani Titi, a GISD member, in the press release. “With this climate ETF aimed at tackling SDG 13, we have created a real opportunity for investors to finance greater good. It is exciting to see our work with the United Nations and other partners to develop standards and tools to mobilize investment in sustainable development paying off in this investment product.”
The fund seeks to track the performance of the MSCI ACWI Climate Pathway Select Index, an index that is built from the parent index, the MSCI ACWI Index, but is exclusionary. The index is built using company ratings and MSCI ESG Research’s ESG controversies scores, ESG ratings, climate change metrics, and ESG business involvement screening research.
Companies excluded from the index include those that have an MSCI ESG rating that is lower than BB, companies that don’t comply with United Nations Global Compact Principles, companies that are involved in controversial business, or companies that are embroiled in serious ESG or environmental controversies.
The securities within the index are weighted in a way that maximizes the index’s low carbon transition score, lowers the average carbon intensity by weight, increases weights of securities that have outlined credible emission reduction targets, and creates a better ESG score for the index compared to the parent index.
NTZO invests in companies of any market cap from the U.S. and other developed countries, as well as emerging market countries.
As a nonprofit, Impact Shares will make charitable donations to the UNCDF (after reserving working capital) of the money accrued from management fees.
“The need to address climate change impacts has never been clearer, especially for the world’s poorest and most vulnerable countries,” said Preeti Sinha, executive secretary of UNCDF. “We at UNCDF are very proud to support the GISD by issuing our second ETF with Impact Shares [after the 2018 launch of SDGA, which includes companies that create positive economic benefits in the Least Developed Countries (LDCs)]. NTZO demonstrates UNCDF’s ability to create innovative financial products that appeal to investors and continue to raise impact standards. And the fee donation will help the UN build climate resilience in the world’s LDCs.”
NTZO carries an expense ratio of 0.30%.
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