HSBC Asset Management has launched a new ETF in Europe providing exposure to the global real estate sector while adhering to the carbon reduction goals of the Paris Agreement.

The ETF delivers climate-focused exposure to the global real estate sector.
The HSBC FTSE EPRA Nareit Developed Climate Pairs Aligned UCITS ETF has been listed on London Stock Exchange in US dollars (HPED LN) and pound sterling (HPES LN) with further listings on SIX Swiss Exchange, Deutsche Börse Xetra, Borsa Italiana, and Euronext Paris expected in the near future.
The fund is linked to the FTSE EPRA Nareit Develoepd Green EU PAB Index which is constructed from the FTSE EPRA Nareit Developed Index universe, a globally recognized property benchmark covering real estate investment trusts (REITs) and real estate operating companies listed in developed markets worldwide.
The methodology first screens out violators of UN Global Compact principles as well as issuers that are embroiled in severe ESG-related controversies or have business operations linked to controversial weapons, tobacco, oil & gas, or thermal coal mining.
The remaining securities are then weighted using an optimization process that is designed to meet the requirements of EU Paris-Aligned Benchmarks (PAB) – specifically, the index offers an immediate 50% reduction in weighted average carbon intensity compared to the initial universe as well as a further 7% annual decarbonization going forward, aligning with a trajectory to limit global warming to 1.5°C by 2050.
The optimization process also seeks to deliver a range of secondary sustainability objectives including a 10% reduction in overall energy consumption and a 30% increase in green certificates (a tradable commodity proving that certain electricity is generated using renewable energy sources).
Furthermore, industry banding constraints are applied to the index to reduce tracking error.
Investors seeking sustainable real estate exposure may also wish to consider funds from BNP Paribas and Credit Suisse. They are the $40 million BNP Paribas Easy FTSE EPRA/NAREIT Global Developed Green CTB UCITS ETF (GRCTB FP) and the $220m CSIF (IE) FTSE EPRA Nareit Developed Green Blue UCITS ETF (GSYZ GY) which come with expense ratios of 0.40% and 0.25%, respectively.