Today, Invesco announce two new ESG ETF’s to meet demand from investors integrating ESG ETFs into their core portfolio holdings.
The first is the Invesco FTSE All Share ESG Climate UCITS ETF that delivers a UK equity portfolio with significant improvements in environmental characteristics – through the FTSE Russell’s target-exposure approach.
Gary Buxton, Head of EMEA ETFs and Indexed Strategies at Invesco, said, “Flows into ETFs with an ESG objective continue to outpace those without one. As demand continues to broaden out, investors need a greater variety of exposures to tailor asset allocation and meet portfolio objectives
Buxton added over the last year Invesco have seen an uptick in demand for strategies with similar profile to standard indices but with methodologies that reward companies with stronger ESG credentials.
The FTSE Russell’s target-exposure approach screens for companies with 50% reduction in index-level carbon emissions, 50% reduction in fossil fuel reserves, 50% increase in green revenues and 10% improvement in index level ESG ratings.
Stéphane Degroote, Head of ETFs and Derivatives EMEA at FTSE Russell, said, “We are delighted that Invesco has selected FTSE Russell as the index provider for their new ETF.”
Degroote added, “Now more than ever, investors recognise the risks and opportunities associated with the low-carbon transition and are incorporating a wider set of considerations, including carbon, green revenues and ESG assessment issues into their decision-making.”
Companies that have faced severe ESG related controversies or are involved in controversial business areas are also screened out.
Chris Mellor, Head of EMEA ETF Equity and Commodity Product Management at Invesco, said, “While excluding the most controversial businesses, we wanted to make sure that we include companies that are capable of improving their ESG profile”
The second fund Invesco announced today is the MSCI Europe ex UK ESG Universal Screened UCITS ETF, which aims to target European companies demonstrating a robust and improving ESG profile, while reducing weight in those with below-average or worsening ratings relative to their peers.
Mellor explained, “Our position as an engaged and active owner of the stocks we hold in our portfolios, both passive and actively managed, allows us to encourage and promote positive change.”
Invesco launched six new ESG ETF products this year. The firm most recently launched the Invesco Global Clean Energy UCITS ETF, designed to track the world’s first index for new energy solutions
Buxton concluded: “Our Global Clean Energy and the even newer FTSE and MSCI ESG ETFs are all good examples of how we are using our simple ETF structure to meet the growing demand of investors. We are keeping investors at the forefront of ETF and ESG innovation.”