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UBS Launches Europe’s First S&P 500 Climate Transition ESG ETF

UBS Launches Europe’s First S&P 500 Climate Transition ESG ETF

(AP Photo/Michael Probst, File)
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UBS Asset Management (UBS AM) has launched the UBS ETF S&P 500 Climate Transition ESG UCITS ETF, marking a significant stride for sustainability-focused investors in Europe. This ETF is the first UCITS exchange-traded fund to track a climate transition index specifically designed to align with the S&P 500 universe. The fund caters to investors seeking exposure to large-cap US equities while prioritizing net zero alignment and an improved environmental, social, and governance (ESG) profile.

The UCITS ETF achieves its climate goals by tracking the S&P 500 Climate Transition Base ESG Index. This meticulously crafted index selects and weights its constituents with the express purpose of aligning them with the transition to a low-carbon and climate-resilient economy. The selection process unfolds in two stages. First, the index excludes companies that have demonstrably violated UN Global Compact principles or surpassed revenue thresholds in controversial industries such as weapons manufacturing, tobacco production, and fossil fuels.

Following this initial screening, the remaining companies are then incorporated into the index through an optimization process. This optimization process prioritizes a substantial 30% initial reduction in carbon intensity, followed by a mandated 7% year-on-year reduction trajectory. This ensures a steady and significant decrease in the fund’s overall carbon footprint over time. But the benefits go beyond carbon reduction. The optimization process also strives to achieve secondary objectives that bolster the fund’s ESG credentials. These secondary objectives include prioritizing companies with demonstrably ambitious science-based carbon reduction targets and achieving a notable 20% improvement in the overall ESG score of the fund.

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The UBS ETF S&P 500 Climate Transition ESG UCITS ETF is classified as an Article 9 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR). This classification signifies that the fund aligns with ambitious sustainability goals, making it a compelling option for investors seeking to align their portfolios with positive environmental and social impact. The fund is available across key European exchanges in USD (CT500 SW), EUR (BCFG GY), and GBP (CT5G LN) share classes. The expense ratio is set at 0.07% for the non-hedged share class and 0.10% for the currency-hedged share classes.

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