DWS has introduced a new suite of equity ETFs in Europe for investors who want to integrate biodiversity considerations into their investment portfolios.
Biodiversity refers to the variety of living species including plants, bacteria, and animals within an ecosystem.
Biodiversity refers to the variety of living species including plants, bacteria, and animals within an ecosystem.
The World Economic Forum predicts that the loss of biodiversity will have the third-largest negative impact on humanity in the next decade, following only climate change and extreme weather.
In the midst of a burgeoning social and political movement aimed at bolstering environmental protection, companies found to be negatively impacting biodiversity are poised to confront increased litigation risks and substantial costs, both in terms of physical and transition expenses.
Investment strategies centered around biodiversity have emerged as a proactive approach for investors seeking to allocate their capital in ways that not only mitigate these risks but also contribute positively to addressing the pressing global biodiversity crisis.
Olivier Souliac, Head Indexing Xtrackers Products at DWS, said: “With the Xtrackers Biodiversity ETFs, investors can transparently reduce the risks associated with the decline in biodiversity for their broadly diversified equity investments. This is an important addition to our range of sustainability-oriented investments.”
Listed on London Stock Exchange and Deutsche Börse Xetra, DWS’s new suite at launch consists of three funds that target global developed, US, and developed European stock markets.
They are the Xtrackers World Biodiversity Focus SRI UCITS ETF (XBIO), the Xtrackers USA Biodiversity Focus SRI UCITS ETF (XBUZ), and the Xtrackers Europe Biodiversity Focus SRI UCITS ETF (XBEE).
Each fund comes with an expense ratio of 0.30%.
Methodology
The ETFs track variations of the ISS STOXX Biodiversity Focus SRI Indices, which employ a comprehensive screening process to advance environmental sustainability and biodiversity conservation.
Initially, the methodology excludes companies that violate international norms, possess notably low ESG scores, or engage in activities related to controversial weapons, palm oil, GMO agriculture, hazardous pesticides, the fur industry, tobacco, adult entertainment, alcohol, gambling, thermal coal, unconventional oil & gas, fossil fuels, nuclear power, civilian firearms, or military contracting.
Subsequently, the remaining companies undergo evaluation using the ISS ESG Biodiversity Impact Assessment Tool. This tool conducts a meticulous bottom-up analysis of a company’s business operations and supply chain to assess their impact on biodiversity. Companies scoring in the bottom 20% within their initial universe are excluded.
Furthermore, the index takes into account the ISS ESG Sustainable Development Goals (SDG) Impact Rating. This rating assesses a company’s contribution, whether positive or negative, to the United Nations’ Sustainable Development Goals (SDGs) across three essential pillars: products & services, operations management, and controversies. Companies ranking in the bottom 20% within their industry sector in this evaluation are also excluded from the index.