Change Finance, a majority women-run money manager, has entered the ETF arena, launching its first ETF strategy that looks beyond fossil fuel-related companies to provide a comprehensive approach to socially responsible investing.
On Tuesday, Change Finance rolled out the Change Finance Diversified Impact U.S. Large Cap Fossil Fuel Free ETF (NYSEArca: CHGX). CHGX has a 0.75% expense ratio.
The Diversified Impact U.S. Large Cap Fossil Fuel Free ETF tries to reflect the performance of the Change Finance Diversified Impact U.S. Large Cap Fossil Fuel Free Index, which follows a rules-based methodology to measure the performance of an equally weighted portfolio of 100 large-cap U.S. companies that meet certain environmental, social and governance standards, according to a prospectus sheet.
The underlying index starts off with the constituents of the Solactive US Large & Middle Cap Index of the 1,000 largest U.S.-listed common stocks, which are then screened against the Index’s ESG criteria based off Oekom Research AG criteria. The methodology is informed by the United Nations Sustainable Development Goals, an internationally agreed-upon standard that seeks to eradicate poverty, protect planetary life support, and achieve lasting peace and dignity for humanity.
“CHGX is a new chapter in investing,” Donna Morton, Change Finance CEO, said in a note. “Our investors want alignment with what they care about, without sacrificing performance. Fossil fuel-free is essential, but CHGX then goes further, divesting not only from companies who dig up, refine, burn and service fossil fuels, but also from companies that are serious polluters, that have significant human or labor rights violations, and that fail to meet a variety of other social and environmental standards. No other ETF does this.”
According to the prospectus sheet, ESG criteria include receiving a minimum Oekom score with respect to (i) whether a company’s primary business is in a prohibited industry (e.g., oil, gas, coal, tobacco); (ii) whether a company is involved in producing goods in a controversial business area (e.g., fossil fuels, nuclear power, genetically modified organisms, military weapons, pesticides); (iii) whether a company has a history of controversial business practices relating to human rights,labor rights, environmental protection, or business malpractice (e.g., corruption, extreme tax avoidance); as well as (iv) standards andperformance criteria related to environmental impacts (e.g., emissions, harmful chemicals in product portfolio, biodiversity management) and human impacts (e.g., hiring practices related to diversity, supply chain standards, health risk in product portfolio).
Top holdings include Micron Technology 1.1%, Abbvie 1.1%, Autozone 1.1%, Kla-Tencor Corporation 1.1%, Metlife 1.1%, Symantic 1.1%, Applied Materials 1.1%, Target 1.1%, Marsh & Mclennan 1.1% and Eaton Corp 1.1%.
“We reject companies that produce pesticides or military weapons, engage in corrupt business practices or have exploitative relationships with labor and Indigenous people,” Andrew Rodriguez, Change Finance President, said. “We move money from harm to healing – harnessing our collective experience in social change. The result is an ETF that invests in companies built for the 21st century. This sort of smart investing can solve some of the worst social and environmental issues, and we believe it could serve as a core holding in any investor’s portfolio. Think of us as inspired by the values of ‘Occupy,’ but powered by the acumen of Wall St.”
For more information on new fund products, visit our new ETFs category.