DWS has unveiled a suite of socially responsible European sector ETFs that exclude companies from industries considered less reputable as well as firms with poor ESG profiles.

The funds are the first ESG-screened European sector ETFs available in Europe.

Each ETF in the suite targets one of the ten major economic sectors defined by the Global Industry Classification Standard (GICS): communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, materials, technology, and utilities.

The suite has been established largely by changing the indices on nine existing European sector ETFs, each housing between $10 million and $120m in assets, to new ESG-screened indices, and the addition of an ETF targeting consumer discretionary stocks which launched in June.

The ETFs use direct physical replication to track indices from MSCI. Each index is derived from the parent MSCI Europe Index, a reference for large and mid-cap companies from 15 developed market countries across Europe.

Countries include Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the UK.

Each sector index harnesses the capabilities of MSCI’s ESG research division to exclude companies associated with weapons or tobacco, firms that derive significant revenue from thermal coal or oil sands extraction, and violators of UN Global Compact principles.

The remaining constituents are assigned ESG ratings that reflect how well each company manages key ESG issues relative to industry peers. Firms with the lowest rating of “CCC” are also removed.

Each index is weighted by float-adjusted market capitalization subject to a cap of 35% on the largest constituent and 20% on any other stock. The indices are reconstituted and rebalanced quarterly or as needed to satisfy the capping constraints.

The ETFs come with expense ratios of 0.20% and are classified as Article 8 products under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).

Simon Klein, Global Head of Passive Sales at DWS, said: “We are pleased to establish these new Xtrackers ETFs providing exposure to MSCI’s ESG screened Europe sector indices. This is in line with the demand we see from clients, while the highly competitive annual all-in fees should also prove attractive.”

The ETFs maintain listings on London Stock Exchange and Xetra and are as follows:

Xtrackers MSCI Europe Communication Services ESG Screened UCITS ETF (XSKR)
Xtrackers MSCI Europe Consumer Discretionary ESG Screened UCITS ETF (XZEC)
Xtrackers MSCI Europe Energy ESG Screened UCITS ETF (XSER)
Xtrackers MSCI Europe Financials ESG Screened UCITS ETF (XS7R)
Xtrackers MSCI Europe Health Care ESG Screened UCITS ETF (XSDR)
Xtrackers MSCI Europe Industrials ESG Screened UCITS ETF (XSNR)
Xtrackers MSCI Europe Information Technology ESG Screened UCITS ETF (XS8R)
Xtrackers MSCI Europe Utilities ESG Screened UCITS ETF (XS6R)
Xtrackers MSCI Europe Materials ESG Screened UCITS ETF (XSPR)
Xtrackers MSCI Europe Consumer Staples ESG Screened UCITS ETF (XS3R)