Data-Driven Technology in Automobiles Could Be Next Big ETF Play

Environmental, social, and governance (ESG) investing is all the rage, but where specifically can investors find opportunities? New research from the World Resources Institute suggests that sustainable ocean-based investments has the potential to yield benefits equal to at least five times greater than the costs, according to a recent CNBC report.

The report said that within “the next 30 years, investing $2 trillion to $3.7 trillion globally across several sustainable ocean-based policy interventions would generate a net benefit of $8.2 trillion to $22.8 trillion, according to the report commissioned by the High Level Panel for Sustainable Ocean Economy, a project of 14 world leaders and the United Nations secretary-general’s special envoy for the ocean.”

The research will concentrate on four main areas: sustainable protein production from the ocean, maintaining mangrove habitats, the proliferation of offshore wind production, and decarbonizing international shipping.

“When we think about the ocean, we think about the impact of climate change on ecosystems and marine habitats. We think about overfishing [and]ocean pollution,” said Manaswita Konar, lead ocean economist in WRI’s Sustainable Ocean Initiative and a co-author of the report.

“But we rarely think about the ocean’s ability to address these challenges and bring about prosperity to the economy,” she said.

ETF Opportunities in ESG

Investors who want ESG exposure via an ETF wrapper can take a look at 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.

One ETF with a focus on low carbon emissions is the iShares MSCI ACWI Low Carbon Target ETF (CRBN). The fund seeks to track the investment results of the MSCI ACWI Low Carbon Target Index, which is designed to address two dimensions of carbon exposure – carbon emissions and potential carbon emissions from fossil fuel reserves.

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