As environmental, social, and governance (ESG) investing continues to gain in popularity, due diligence is necessary in order to ensure the veracity of companies marketing themselves as ESG-friendly. As such, HSBC launched a reporting service that provides asset owners and managers with an independent measurement of how focused their listed asset investments are on ESG issues.
Per a press release, the new service will allow asset owners, such as insurance companies, pension funds and sovereign wealth funds, and the asset managers that invest their money, to keep track of the ESG ratings of their large holdings and help them meet the increasing demand for greater transparency and more insight in this area.
HSBC is recognized as a leading partner in the transition to a low-carbon world. In 2017, the bank pledged to provide USD100 billion of financing and investments by 2025 and is consistently top-ranked globally for green, social and sustainable bonds, and ESG Research.
“ESG is rising up the agenda for our clients, regulators, and investors alike. This reporting service will enable our Securities Services clients to gain meaningful insights into ESG aspects of their portfolios using independent scores and ratings,” said Chris Johnson, Director of Market Data for Securities Services at HSBC. “This tool will enable Securities Services clients to see at a glance how large holdings in their selected portfolios are performing using recognized independent ESG criteria.”
— Saeed Valadbaygi (@SaeedBaygi) July 21, 2020
ESG ETF Exposure
As opposed to picking individual companies with ESG initiatives, investors who want ESG exposure can do so via an ETF wrapper like the Xtrackers MSCI EAFE ESG Leaders Equity ETF (EASG). EASG seeks investment results that correspond generally to the performance of the MSCI EAFE ESG Leaders Index.
The fund will invest at least 80% of its total assets (but typically far more) in component securities (including depositary receipts in respect of such securities) of the underlying index. The underlying index is a capitalization-weighted index that provides exposure to companies with high ESG performance relative to their sector peers.
An additional fund to look at is the Xtrackers MSCI USA ESG Leaders Equity ETF (NYSE Arca: USSG), which has been a popular play for investors seeking exposure to socially responsible investments. USSG was developed in collaboration with Ilmarinen, Finland’s largest pension insurance company. The underlying MSCI USA ESG Leaders Index provides exposure to large- and medium-cap U.S. companies with high ESG performance relative to their sector peers.
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