A salvo of ETFs aimed at climate-conscious investors has hit the market in South Korea, providing carbon-adjusted exposure to domestic equities.

The funds provide broad exposure to Korea’s equity market while tilting to those with lower greenhouse gas emissions relative to revenue.

Four different issuers have launched products, each of which is based on the S&P/KRX Carbon Efficient Capped Index and listed on Korea Exchange.

The issuers behind the funds are Samsung Asset Management, Mirae Asset Global Investments, NH-Amundi, and Hanwha Asset Management.

The funds come with expense ratios ranging from 0.09% to 0.20%.

The S&P/KRX Carbon Efficient Capped Index provides broad exposure to Korean equities while overweighting (or underweighting) companies with lower (or higher) levels of greenhouse gas emissions relative to revenue.

The index aims to promote behavioural change by redistributing capital towards companies most-aligned with the government’s Green New Deal initiative’s goal of achieving carbon neutrality in South Korea by 2050.

Index construction starts from the parent S&P Korea BMI, a broad representation of common stocks listed on the KOSPI and KOSDAQ markets of the Korea Exchange. The methodology then harnesses data from TruCost, a company owned by S&P Global, to assign each stock a carbon footprint based on its greenhouse gas emissions (direct and first-tier indirect) relative to revenue.

Companies that have not sufficiently disclosed their carbon emissions are removed from the index pool.

The index maintains the same Global Industry Classification Standard (GICS) industry weights as the S&P Korea BMI as of each rebalance while adjusting constituent weights within each industry to reduce the index’s total emissions-per-revenue profile.

Constituents are ranked within each of the 24 GICS industry groups by emissions-per-revenue and sorted into deciles. Constituents in the top three deciles have their weight reduced, while those in the bottom three deciles have their weight increased.

Additionally, each GICS industry is identified as either Low, Mid, or High Impact with High Impact industries displaying the widest range between their first and tenth decile average emissions-per-revenue. Constituents from High Impact industries that are undergoing a weight change will have that change multiplied by a factor of three, while constituents from Low Impact industries that are undergoing a weight change will have that change multiplied by a factor of 0.5.

The index is reconstituted annually and rebalanced quarterly.

The four ETFs are as follows:

Kodex Carbon Efficient Green New Deal ETF (375770 KS) (Samsung Asset Management)
Expense ratio 0.09%.

Tiger Carbon Efficient ETF (376410 KS) (Mirae Asset Global Investments)
Expense ratio 0.15%.

Hanaro Green New Deal ETF (375760 KS) (NH-Amundi)
Expense ratio 0.20%.

Arirang Carbon Efficient Green New Deal ETF (376250 KS) (Hanwha Asset Management)
Expense ratio 0.20%.