Lyxor ETF has launched four new equity ETFs designed to “meet and exceed” the EU Paris-aligned benchmarks’ minimum requirements across multiple regions.
The new ETFs track the S&P Paris-aligned Climate indices for Eurozone, European, US and global equities, which adhere to the Task Force for Climate-related Financial Disclosure (TCFD) and target a global warming increase of 1.5 degrees with "no or limited overshoot".
Each portfolio will need to achieve an "absolute decarbonisation trajectory" of 7% year-on-year and seek a 50% reduction in emissions by 2030, a "major milestone" on the path to net-zero 2050.
To achieve this, the ETFs will integrate the greenhouse gas emissions of the "entire value chain" of any given company, while also taking the "physical risk to business activity" from "extreme climate events" into account.
The funds will also exclude companies active in coal, above certain thresholds for oil, natural gas and carbon intensive electricity production, and those "harming the EU's environmental objectives", involved in controversial weapons, tobacco or those "violating societal norms".
The Lyxor S&P Eurozone Paris-Aligned Climate (EU PAB) (DR) UCITS ETF has today been listed on Euronext and will be listed on Xetra in July, while the US exposed product will be listed on Xetra and the London Stock Exchange (LSE) in July, the global ETF on Xetra and LSE in September and the Europe fund on Xetra in September, all of which will be listed with a total expense ratio of 0.2%.
Arnaud Llinas, head of Lyxor ETF and indexing, said: "EU climate benchmarks are just one of the ways Europe is taking the lead on climate. At Lyxor, we believe in the power of indices and ETFs to build on data and shift capital at scale towards a climate neutral economy.
"With this latest enhancement to our climate ETF ecosystem, we are helping investors take their decarbonisation ambitions to the next level as well as adopting an even greener approach through fossil fuel exclusions."
Reid Steadman, global head of ESG indices at S&P Dow Jones Indices, added: "We are very pleased that Lyxor has selected our S&P Paris-aligned climate indices as the underlying benchmarks for its new exchange-traded funds.
"We are proud to offer innovative and transparent indices in Europe and globally that help our clients navigate the transition to a low carbon economy, and capture both financial risks and opportunities."