Amundi is preparing to launch a new socially responsible ETF which is set to be the first in Europe to track a climate-conscious version of the flagship French equity index, the CAC 40.
Amundi is set to be the first ETF issuer in Europe to offer climate-conscious exposure to French equities.
The fund is set to list on Euronext Paris in the coming weeks.
Amundi has not yet released details of the fund’s ticker code or its expense ratio, although the asset manager’s €3.2 billion regular CAC 40 ETF, as well as its €900 million ESG-tailored CAC 40 ETF, are both priced at 0.25%.
Methodology
The fund will track the CAC SBT 1.5° Index, developed by Euronext, which is constructed from the SBF 120 Index universe, a broad French equity benchmark consisting of the 120 highest-ranked stocks when ordered using a combination of float-adjusted market capitalization and average daily trading volumes.
The methodology first removes violators of UN Global Compact principles, companies embroiled in severe ESG-related controversies, and firms with business operations linked to tobacco, controversial or civilian weapons, unconventional oil & gas, and thermal coal.
The index then hones in on climate-based criteria, selecting only companies that possess clear carbon emission reduction targets that have been validated by the Science Based Targets initiative, the gold standard for corporate climate goals.
Specifically, eligible firms must be aligned with a maximum 1.5°C near-term temperature increase based on Scope 1 & 2 emissions, as well as be aligned with a maximum 2°C temperature increase based on Scope 3 emissions.
Eligible constituents are weighted by float-adjusted market capitalization subject to a single stock cap of 10%. Reconstitution and rebalancing occur on a quarterly basis.
As of the end of December 2022, the index contained 38 names with the top ten positions accounting for a sizable 72.4% of the total weight. They were Schneider Electric (10.0%), LVMH (10.0%), Hermes (9.8%), Kering (9.4%), Capgemini (6.4%), Dassault Systems (5.9%), Saint Gobain (5.6%), STMicroelectronics (5.5%), Legrand (5.3%), and Orange (4.6%).
The index’s industry allocation was dominated by stocks from the consumer discretionary and industrials sectors at 38.4% and 29.9%, respectively, with a notable allocation also to information technology at 19.5%.