HANetf has teamed up with Société Générale to launch a new thematic equity ETF targeting eurozone companies poised to benefit from the European Green Deal.
Hector McNeil, Founder and co-CEO of HANetf.
The European Green Deal UCITS ETF has been listed on London Stock Exchange in US dollars (Ticker: EUGD LN) and pound sterling (Ticker: EUGD LN) as well as on Deutsche Börse Xetra in euros (ASWA GY).
Set forth by the European Commission and committed to by all 27 member states of the European Union, the European Green Deal is a landmark economic strategy that aims to reduce Europe’s greenhouse gases by 55% by 2030 and achieve carbon neutrality for the continent by 2050.
The Deal requires the mobilization of an estimated €1 trillion in sustainable investments over the next decade with the EU earmarking at least 30% of its budget under the ‘Multiannual Financial Framework’ and ‘NextGeneration EU’ initiatives to tackle climate change and support green projects.
Key sectors that are expected to benefit from the Deal include Clean Energy (the EU is aiming to increase renewable energy generation from 22% in 2021 to 45% in 2030), Sustainable Mobility (an estimated 90% reduction in transport-related emissions is needed by 2050), Building & Renovation (the European Commission is aiming to improve energy efficiency by doubling the current renovation rate of public and private buildings), and the Circular Economy (the EU has set a 70% waste recycling target by 2030, up from 55% last year).
Hector McNeil, Founder and co-CEO of HANetf, commented: “The European Green Deal is set to reshape the European Union’s economy over the coming decades, as member states strive to achieve climate neutrality by 2050. This will require considerable investment and should promote the growth of companies that have a role to play in the transition.
“We are delighted to be working with Société Générale to launch the European Green Deal UCITS ETF which will provide investors with a means of accessing the companies that will be central to Europe’s net-zero transition.
Methodology
The fund is linked to the Societe Generale SGI European Green Deal ESG Screened NTR Index which selects its constituents from an initial universe of eurozone companies with market capitalizations greater than €500 million and average daily trading volumes above €5m.
The methodology first screens out violators of UN Global Compact principles, companies that are involved in controversial weapons or derive significant revenue from thermal coal, and firms with environmental profiles that rank in the third tier according to SocGen’s proprietary analysis.
Components are selected for the index by SocGen’s Equity Research Team which identifies relevant industries within each of the four key policy areas: Clean Energy (relevant industries include Renewable, Energy, Wind Energy Equipment, and Electrification); Sustainable Mobility (Rail, Electric Vehicles, Hydrogen, and Biofuel); Building and Renovation (Climate proofing and Energy Efficiency); and Circular Economy (Recycling, Waste Management, and Reusable Packaging).
Constituents are equally weighted, and the index is rebalanced on a monthly basis.
As of the end of June, stocks from France and Germany each accounted for approximately one-quarter of the index weight with the next-largest country exposures being Spain (8%), Italy (8%), and Switzerland (6%).
Capital goods (36%) and utilities (32%) dominated the index’s sector allocation followed by materials (12%), semiconductors (10%), and energy (4%).
The index contained 50 stocks, each accounting for a 2% weight as of the latest monthly rebalance.
The ETF comes with an expense ratio of 0.60% and is classified as an Article 8 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).