Legal & General Investment Management (LGIM) has added an emerging markets ETF to its suite of funds aligned with the carbon reduction goals of the Paris Agreement.

LGIM now offers five Paris-aligned equity ETFs.

The L&G Emerging Markets ESG Exclusions Paris Aligned UCITS ETF has been listed on London Stock Exchange in US dollars (RIEM LN), pound sterling (RIEE LN), and euros (REAG LN).

The fund tracks the performance of the Foxberry Sustainability Consensus Emerging Markets Total Return Index which is constructed from an initial universe comprising large and mid-cap stocks within developing countries.

The index utilizes a committee-based approach to identify companies that pass a range of ESG exclusion guidelines related to environmental, governance, sustainability, workplace equality, and ethical concerns, as well as adherence to UN sustainable development goals and business-practice norms.

The methodology is also tailored to satisfy the requirements for EU Paris Aligned Benchmarks. Specifically, this entails removing firms involved in controversial weapons and tobacco as well as companies that derive significant revenue from weapons, coal, fossil fuels, natural gas, and high-carbon-emitting electricity production.

Index constituents are then weighted so as to achieve an immediate 50% reduction in carbon intensity and fossil fuel reserves relative 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 above pre-industrial levels by 2050.

The ETF comes with an expense ratio of 0.25% and is classified as an Article 9 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).

The fund joins LGIM’s existing four Paris-aligned ETFs which target stocks listed in the US, developed Europe, Japan, and developed Asia Pacific ex-Japan. The US-focused fund has an expense ratio of 0.12% while the other three ETFs cost 0.16%.