DWS has unveiled a new socially responsible ETF in Europe providing exposure to euro-denominated, short-term bonds from corporate issuers.

The ETF screens out issuers operating in disreputable industries as well as those with below-average ESG profiles.

The Xtrackers ESG EUR Corporate Bond Short Duration UCITS ETF (XZE5 LN) has listed on the London Stock Exchange in pound sterling and comes with an expense ratio of 0.16%.

The fund is also due to cross-list on Deutsche Börse Xetra next month where it will trade in euros.

The ETF’s underlying reference is the Bloomberg Barclays MSCI Euro Corporate Sustainable and SRI 0-5 Year Index which is based upon the Bloomberg Barclays Euro Corporate 0-5 Year Index universe.

The universe includes bonds that are rated investment grade, have an amount outstanding of at least €300m, and maturity within five years.

MSCI provides the ESG screening methodology which initially excludes any firm with operations linked to alcohol, gambling, tobacco, weapons, pornography, and genetically modified organisms.

The remaining companies are then assigned scores on a seven-point scale that indicates a firm’s ability to manage key ESG risks relative to sector peers. Only companies scoring BBB (average) or higher make the final cut.

The index is weighted by market value outstanding and rebalanced on a monthly basis.

The fund complements DWS’s $760 million Xtrackers ESG EUR Corporate Bond UCITS ETF (XB4F GY) which follows the same methodology but covers the entire maturity spectrum for the euro-denominated corporate bond market. It also comes with an expense ratio of 0.16%.