Amundi has expanded its socially responsible investment offering with the launch of a euro corporate bond ETF aligned to the Paris Agreement’s objective on climate change.

Fannie Wurtz, Head of Amundi ETF, Indexing and Smart Beta.

The Amundi iCPR Euro Corp Climate Paris Aligned PAB – UCITS ETF (PABC GY) has listed on Deutsche Börse Xetra in euros and is due to cross-list on Euronext Paris (PABC FP) in the near future.

The fund comes to market with €15 million in assets.

Fannie Wurtz, Head of Amundi ETF, Indexing and Smart Beta, said: “The launch of this ETF illustrates our unwavering commitment to developing simple, ready-to-use tools that help investors to implement their ESG and climate strategy depending on their objectives and constraints.

“We believe that ETFs have a critical role to play in driving the transition to a low carbon economy.”

Methodology

The ETF is linked to the Solactive iCPR Climate Credit PAB Investment Grade Index which is based on the Solactive Euro IG Corporate Index. This parent universe includes fixed-coupon, investment-grade, euro-denominated bonds with maturities greater than one year that have been issued by corporate issuers globally.

The methodology first screens out proven violators of UN Global Compact principles, issuers with business activities linked to controversial weapons or tobacco, and firms that generate revenue above a certain threshold from coal (1% threshold), oil (10%), natural gas (50%), or high carbon-emission electricity generation (50%).

The remaining securities are then weighted using an optimization process that is designed to meet the requirement of an EU Paris-aligned benchmark (EU PAB). Specifically, the index achieves an instant 50% reduction in total carbon intensity relative to its parent universe and pursues an additional year-on-year decarbonization trajectory of at least 7% moving forward. These requirements align the index with a 1.5°C climate change scenario through 2050.

The optimization process also seeks to limit deviations in region, sector, and duration bucket exposures relative to the parent index; however, these constraints may be relaxed in order to ensure that the Paris-aligned objective is met.

The fund comes with an expense ratio of 0.16% which is nine basis points cheaper than the only other Paris-aligned fixed income ETF in Europe – the Tabula EUR IG Bond Paris-aligned Climate UCITS ETF (TABC GY). This fund, which launched in January, similarly targets investment-grade, euro-denominated corporate bonds and is linked to the Solactive ISS Paris Aligned Select Euro Corporate IG Index.

Amundi also offers a suite of Paris-aligned equity ETFs covering global developed, European, and eurozone stock markets. All of the issuer’s Paris-aligned ETFs are categorized as Article 9 products under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).