Another ESG bond ETF is the NuShares ESG U.S. Aggregate Bond ETF (NYSEArca: NUBD), which debuted in October.
Environmental assessment categories can include a company’s impact on climate change, natural resource use, and waste management and emission management. Social evaluation categories can include a company’s relations with employees and suppliers, product safety and sourcing practices. Governance assessment categories can include governance practices and business ethics.
NUBD follows the MSCI US Aggregate ESG Select Index, which screens for certain environmental, social and governance, or ESG, criteria when selecting from securities taken out of the benchmark Bloomberg Barclays US Aggregate Bond Index, a broadly designed index that captures U.S. investment-grade, taxable fixed income securities.
“While the idea of socially responsible investing (SRI) is not new, it is new within the bond ETF landscape. That newness is not stopping some industry observers from forecasting significant growth ahead for socially responsible and sustainable bond ETFs. Importantly, the potential for ESG fixed income growth could be widespread across corporate bonds, sovereign debt and other parts of the bond market,” according to Investopedia.
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