Goldman Sachs Asset Management has launched a new ETF in the US providing thematic exposure to companies operating in the clean energy ecosystem.
The ETF provides exposure to companies worldwide that operate within clean energy industries.
The Goldman Sachs Bloomberg Clean Energy Equity ETF (GCLN US) has been listed on Cboe BZX Exchange with an expense ratio of 0.45%.
The fund is linked to the Bloomberg Goldman Sachs Global Clean Energy Index which was jointly developed by Bloomberg and Goldman Sachs, utilizing a combination of analyst research and curated data acquired from a variety of sources.
The index’s construction process starts with analysts in Bloomberg’s New Energy Finance team (BloombergNEF) identifying relevant companies from the broader Bloomberg World Index that operate in wind, energy storage, clean power, networks, digitalization, bioenergy, solar, and hydrogen industries.
Each identified company is then assigned a thematic relevance score based on BNEF analysts’ estimates of the proportion of that company’s value that is attributable to clean energy activities. The analysts take into account reported segment revenues, along with other available metrics such as segmented EBITDA.
The estimates also account for a company’s current and planned activities in the various sectors it is involved in, such as GWh breakdown of electricity production and a capacity breakdown of generation assets.
Analysts also consider the expected growth of clean energy-relevant business lines, relative to other business lines, and weigh up the relevance of external factors that affect a company’s exposure to clean energy. Assessments are adjusted to exclude activities or values solely focused on zero-emission vehicles.
Estimates are reviewed by sector specialists on a quarterly basis.
Using this data, each company is assigned to a thematic revenue exposure category: A1 (Main Drive, 50-100%), A2 (Considerable, 25-49%), A3 (Moderate, 10-24%), or A4 (Minor, <10%). Companies with thematic revenue exposure of less than 10% are excluded from the investable universe.
The methodology also excludes the largest 15% of emitters without Science Based Targets initiative (SBTi) or Net Zero commitments, as well companies that fail various absolute and/or revenue-based exclusions pertaining to ESG controversies such as violation of UN Global Compact Principles or involvement with civilian firearms, thermal coal extraction, tobacco, arctic oil and gas exploration, oil sands, or thermal coal power generation.
The companies that remain are then weighted according to their clean energy exposure, subject to various caps. Specifically, 60% of the index weight is assigned to issuers classified as A1 Main Drive, with the top eight issuers by weight in this category capped at 5% and the rest of the issuers in this category capped at 4%. Thirty percent of the index weight is assigned to securities classified as A2 Considerable, with security weights in this category capped at 2.5%. The remaining 10% of the index weight is assigned to issuers classified as A3 Moderate, with issuer weights in this category capped at 1%.
The index is rebalanced on a quarterly basis.