Invesco has introduced a new ETF designed to provide exposure to a portfolio of North American equities that is aligned with ambitious climate objectives.
KLMN offers exposure to a portfolio of US and Canadian equities that is aligned with ambitious climate objectives.
The Invesco MSCI North America Climate ETF (KLMN US) has been listed on the New York Stock Exchange with an expense ratio of 0.09%.
The fund has come to market with a record $2.4 billion in assets from Finnish pension insurer Varma.
Brian Hartigan, Global Head of ETFs & Index Investments at Invesco, commented: “We are excited to collaborate once again with MSCI and Varma on a newly developed index and ETF that will allow Varma to easily execute a large allocation that aligns precisely with their investment views. Invesco is in a rare position to service global, institutional clients who want to leverage the liquidity and efficiency of ETFs to target important allocations in their investment portfolios.”
Methodology
The ETF tracks the MSCI Global Climate 500 North America Selection Index which is composed of US- and Canada-listed stocks that are part of the broader MSCI ACWI Select Climate 500 Index.
The parent index is derived from a global universe of large- and mid-cap stocks across developed and emerging markets. Companies involved in severe ESG controversies or activities such as controversial weapons, nuclear weapons, tobacco, thermal coal, and fossil fuel-based power generation are excluded.
The index methodology employs an optimization model that selects and weights 500 stocks in order to achieve certain environmental objectives while minimizing deviations in country, sector, and stock weights relative to the broader universe.
The environmental objectives include reducing carbon intensity, measured by Scope 1 and 2 emissions relative to enterprise value, by 7% per annum since 2020. Similarly, carbon intensity measured by Scope 1 and 2 emissions relative to sales is targeted for a reduction of 10% per annum since 2020. Additionally, the index aims to boost the weight of companies with clear carbon emission reduction targets by at least 20%.
To maintain alignment with its climate goals, the index is fully reviewed on a semi-annual basis.