BNP Paribas has cross-listed two new equity ETFs on Deutsche Börse’s Xetra and Frankfurt exchanges, providing exposure to companies listed in the US and emerging markets.
MSCI ESG Research is the largest provider of ESG ratings globally.
The BNP Paribas Easy MSCI KLD 400 US SRI UCITS ETF (EKLD GR) tracks the MSCI KLD 400 Social Index, a capitalization-weighted index of 400 US securities that provides exposure to companies with outstanding ESG ratings. It trades in US dollars and has a total expense ratio (TER) of 0.30%.
The second cross-listing is the BNP Paribas Easy MSCI Emerging Markets SRI ETF (ESRI GY) which tracks the MSCI Emerging Markets SRI Index and currently includes 183 high ESG scoring companies from across 24 emerging market countries. The fund trades in euros and has a TER of 0.45%.
The funds track MSCI indices that are constructed using data from MSCI ESG Research, the world’s largest provider of environmental, social and corporate governance (ESG) ratings.
The indices employ a two-stage process to select constituents. Starting from each index’s parent universe, companies involved in nuclear power, tobacco, alcohol, gambling, military weapons, civilian firearms, GMOs and adult entertainment are excluded.
Secondly, remaining constituents are evaluated and ranked according to MSCI’s ESG Intangible Value Assessment, which identifies companies that have demonstrated an ability to manage their ESG risks and opportunities. This step seeks to analyse a company based on the ESG risks and opportunities specific to the industry the firm operates in – a process which MSCI believes provides a better comparison of ESG ratings than using conventional analysis.
Each index then selects a number of the highest ranking securities, while constraining sector weights to ensure the indices’ exposures do not differ significantly from their parents. For more information on this process, see “BNP Paribas launches two equity SRI ETFs”.