BNP Paribas Asset Management has added to its line-up of Paris-aligned low-carbon equity ETFs with the launch of the BNP Paribas Easy Low Carbon 100 Eurozone PAB UCITS ETF.
Isabelle Bourcier, Head of Quantitative & Index Management at BNP Paribas Asset Management.
Listed on Euronext Paris (LCEZ FR) and Xetra (LCDE GY) in euros, the fund provides exposure to eurozone-listed companies with low carbon and robust ESG characteristics while weighting the portfolio so as to achieve compliance with the climate-change goals of the Paris agreement.
The fund is referenced to the Euronext Low Carbon 100 Eurozone PAB Index, an index managed by exchange operator and index provider Euronext.
Constituents are selected from an initial universe comprising the 300 largest companies from developed market countries in the eurozone.
From this initial universe, Euronext taps the expertise of ESG specialist V.E (formerly Vigeo Eiris and now part of Moody’s) to exclude the 30 companies with the worst combined social and governance score, companies that are in violation of UN Global Compact principles, companies that are classified in the tobacco, defence, aerospace, and oil equipment and services sectors, and companies with fossil-fuel or controversial weapons-related activities.
Euronext then selects 100 constituents from the remaining pool, choosing firms with the highest sector-specific climate scores. A maximum of 15 companies that derive at least 50% of their revenue from renewable energy or energy efficiency technologies will be included in the selection.
The 100 constituents are then weighted using an optimization process that ensures consistency with the objectives of the EU’s Paris Aligned Benchmark (PAB) criteria, namely a reduction in the index’s carbon intensity relative to the initial universe by at least 50% and an annual decarbonization target of 7%. Individual stock positions are capped at 10%.
The composition of the index is reviewed on an annual basis.
The ETF comes with an expense ratio of 0.30% and is classified as Article 9 under the European Union’s Sustainable Finance Disclosure Requirement (SFDR). Income is accumulated.
The fund is the third low-carbon Paris-aligned equity ETF from BNP Paribas, accompanying the BNP Paribas Easy Low Carbon 300 World PAB UCITS ETF (LCWLD FR) and BNP Paribas Easy Low Carbon 100 Europe UCITS ETF (LCEU GY) which utilize a similar methodology applied to global developed and European equity markets respectively.
Isabelle Bourcier, Head of Quantitative & Index Management at BNP Paribas Asset Management, said: “We are convinced that to be sustainable, the economy must move towards a low carbon model favouring the energy transition. To meet the expectations of professional and retail investors, BNP Paribas Asset Management is extending its range with the launch of this third ETF, thereby reaffirming its leadership in index solutions focused on ESG themes.”