Given tech’s heavy weighting on the overall stock market, there’s a plethora of ways to get that exposure, especially in the exchange traded fund (ETF) universe. Getting tech exposure with a touch of environmental, social, and governance (ESG) requires a more discerning screener.
Big tech was already making a skew toward ESG, especially given its wide influence politically and economically. As ESG continued to proliferate over the past few years, more investors wanted that ESG component while at the same time getting exposure to the benefits of market gains that big tech is capable of providing.
“Many of the biggest names in tech earn strong ESG ratings from investor research and ratings firms due to the low-emissions footprint of delivering software and cloud services,” a Forbes report from last year noted. “Although ESG challenges remain — especially for hardware companies that face difficult decisions around manufacturing labor and materials sourcing — the S&P 500’s tech sector makes up the largest allocation in many popular ESG equity funds.”
To get exposure to big tech while also reaping the benefits of ESG, ETF investors can consider the Invesco ESG Nasdaq 100 ETF (QQMG). The fund is based on the Nasdaq-100 ESG Index, which is designed to measure the performance of companies included in the Nasdaq 100 that meet ESG criteria.
To satisfy the ESG criteria, an issuer must not be involved in certain specific business activities, such as alcohol, cannabis, controversial weapons, gambling, military weapons, nuclear power, oil & gas, and tobacco. Additionally, an issuer must be deemed compliant with the United Nations Global Compact principles, meet business controversy level requirements, and have an ESG Risk Rating Score that meets the requirements for inclusion in the Index.
An ESG Growth Play on Disruptive Tech
While big tech can offer growth potential, other investors are looking at opportunities that not only can provide returns today, but also for years to come. This is where disruptive technology comes into play, getting exposure to up-and-comers outside the Nasdaq 100.
To get this level of exposure, there’s the Nasdaq Next Generation 100 Index, which focuses on the performance of the next generation of Nasdaq–listed non–financial companies; that is, the largest 100 companies outside of the Nasdaq–100. To get an ESG component in the mix, consider the Invesco ESG NASDAQ Next Gen 100 ETF (QQJG).
The fund is based on the Nasdaq Next Generation 100 ESG Index. The Index is designed to measure the performance of companies included in the Nasdaq Next Generation 100 Index that also meet ESG criteria that is similar to QQMG’s screener.
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