Environmental, social, and governance (ESG) investing was a worldwide phenomenon before it caught fire in the United States. ETF investors looking to get international ESG exposure outside of the country can look at funds like the Xtrackers MSCI ACWI ex USA ESG Leaders Equity ETF (ACSG).

ACSG seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI ACWI ex USA ESG Leaders Index. The fund will normally invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities from countries other than the United States.

The underlying index is a capitalization weighted index that provides exposure to companies with high environmental, social, and governance performance relative to their sector peers. MSCI ACWI ex USA ESG Leaders Index consists of large and mid cap companies across 22 Developed Markets (DM) and 24 Emerging Markets (EM) countries.

Additionally, the Index is designed for investors seeking a broad, diversified sustainability benchmark with relatively low tracking error to the underlying equity market. The index is a member of the MSCI ESG Leaders Index series. Constituent selection is based on data from MSCI ESG Research.

ACSG Chart

ESG Investing in Asia

A recent article in The Asset spoke to the investing force known as ESG:

“The second evolution taking place in financial markets has been the rise in products catering to ESG (environmental, social and governance) investors, one of the fastest growing investment themes of 2020,” the article said. “Much of this activity has been driven by actions to combat climate change. Asian economies such as Japan and South Korea have both announced ambitious carbon-neutrality targets just a couple of weeks ago. Taiwan is also in the process of refining its carbon emission infrastructure to further reduce its carbon footprint.”

“Another factor behind the growing popularity of ESG investing in Asia has been commitments made by major public pension funds,” the article added. “Japan’s Government Pension Investment Fund (GPIF) has been instrumental in pioneering a stronger ESG focus in the region, having signed the Principles for Responsible Investment way back in 2015. Taiwan’s Bureau of Labor Funds (BLF), Hong Kong’s Monetary Authority, Malaysia’s Employee Provident Funds and Thailand’s Government Pension Fund have all made announcements supporting the growth of ESG investing. All of this will encourage more sustainable and climate-focused fund mandates and inflows into ESG instruments in 2021.”

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