Severe changes to our climate are all but locked in unless we cut carbon emissions drastically. Governments must lead but today’s investors have the tools, and the capital, to make a significant difference. Thankfully, there’s never been a better time to invest it in our planet.
Switching to our Net Zero 2050 Climate ETFs could help halve your portfolio’s carbon footprint instantly and achieve a 7% decarbonisation rate each year*. Such a move could also help you insulate it from the effects higher carbon prices could have on global equity markets in the future. One simple act. One big impact.
“Net Zero”, when man-made greenhouse gases emitted into our atmosphere are fully offset by their removal, has normalised in our vocabulary. More and more companies, investors and governments are committing to carbon neutrality - with potentially profound effects on your portfolio. There are however some important differences between Net Zero commitments that you should be aware of before you join the race. Read our blog to learn more about they might affect you.
It’s all based on a carbon budget
Emissions reduction pledges depend on a base year
All pathways assume carbon removal/capture
Lyxor’s pioneering Climate ETFs were built to help you put your philosophy into practice in your portfolio. Unlike traditional cap-weighted indices, ours select and weight companies which are collectively compatible with the Paris Agreement’s most ambitious 1.5°C global warming scenario, whilst also applying wider ESG selectivity criteria. Here’s how they do it.
All eight ETFs within our unique ecosystem of CTB and Net Zero 2050 PAB ETFs align to the EU’s Low Carbon Benchmark standards. Most are SFDR 9** compliant, and they range across Global, US, European and Emerging Markets. They all share a common goal of limiting global warming to 1.5°C, but the PAB ETFs come with a more aggressive initial carbon intensity reduction and additional fossil fuel exclusions – meaning they could get your portfolio to Net Zero sooner. Together, these funds have now been trusted with €1.6bn in AUM.***
1st ecosystem of EU CTB & PAB eligible ETFs in the world
ESG selectivity improves portfolio ESG scores
Climate-focused investors could also consider an exposure to our SFDR 9 Green Bond ETFs. These ETFs invest solely in bonds issued to fund eco-friendly projects. Each of these bonds aligns with strict standards set by the Climate Bonds Initiative, so you can be sure your money is supporting the low-carbon transition.
*The S&P Net Zero 2050 Paris-Aligned Climate ESG Index Series’ methodology aligns with certain specified criteria through the use of optimization with multiple model constraints including an instant reduction of overall greenhouse gas (GHG expressed in CO2 equivalents) emissions intensity relative to their respective underlying parent indices of at least 50%, and minimum self-decarbonization rate of GHG emissions intensity in accordance with the trajectory implied by Intergovernmental Panel on Climate Change’s (IPCC) most ambitious 1.5ºC scenario, equating to at least 7% GHG intensity reduction on average per annum.
**SFDR = Sustainable Finance Disclosure Regulation. The Lyxor MSCI World Climate Change (DR) UCITS ETF is an SFDR Article 8 fund, though we will seek to make the fund SFDR Article 9 compliant in time.
***Source: Lyxor Asset Management as at the end of September 2021.