Purpose Investments and HANetf have teamed up to launch Europe’s first ETF to incorporate carbon offsetting.
The ETF supports projects such as Musi River Hydro – a hydropower plant for the Indonesian island of Sumatra.
Set to make its debut on the LSE in days, the HANetf S&P Global Clean Energy Select HANzero UCITS ETF will provide investors with exposure to the S&P Global Clean Energy Select Index while offsetting an amount of carbon equivalent to the aggregate emissions of the companies in the index prorated to the value of the investment.
In effect, it means the carbon emissions apportioned to the fund’s holdings – specifically the proportion of aggregate operational and first-tier supply chain carbon footprints of the companies in the index attributable to the fund’s ownership – will be offset to zero.
This is achieved by using a Carbon to Value Invested ratio (Metric tons CO2e /USD 1 million invested) computed by index provider S&P Dow Jones Indices to calculate a daily accrual which will then be offset by the fund through investments in carbon-reduction projects selected by offset specialists, South Pole.
A carbon offset project reduces emissions of carbon dioxide or other greenhouse gases made to compensate for emissions produced elsewhere. The projects the fund will support will comply with standards set by the International Carbon Reduction and Offset Alliance (ICROA) and be in line with the UN’s Sustainable Development Goals.
These projects will be subject to full screening, third-party auditing, and in-house due diligence to ensure they fulfil their objectives.
The cost of these offset projects will be taken from the fund’s total expense ratio and will not negatively drag on performance beyond what is already built into the TER. The TER includes an implicit premium to cover the offset programme.
The fund will come with a TER of 0.55% and be available to trade on the LSE in US dollars (ZERO LN) and pound sterling (ZERP LN). It will be passported for sale across Europe.
The fund will be scheduled Article 6 under the Sustainable Finance Disclosure Regulation (SFDR).
The companies in the underlying index – there are 30 pure-play constituents – are active across biofuel, fuel cell technology, geothermal energy, hydroelectricity, solar and wind power. Major positions include Plug Power, Enphase Energy, Verbund, Meridian Energy, Daqo New Energy, Siemens Gamesa Renewable Energy, Ormat Tech, Xinyi Solar, First Solar and Contact Energy.
Nik Bienkowski, co-Founder and co-CEO at HANetf, said: “Environmentally conscious investors can now target capital growth with the HANetf S&P Global Clean Energy Select HANzero UCITS ETF, ZERO, safe in the knowledge that any carbon emissions linked to their investment will be offset in some exciting global climate positive projects with our partners at South Pole.”
Som Seif, Founder and CEO of Purpose Investments, added: “As global consensus solidifies behind the fight against climate change, the HANetf S&P Global Clean Energy Select HANzero UCITS ETF not only delivers access to the most exciting pure-play clean energy companies but it offers an article 6 product under SFDR and the opportunity to remove an investor’s carbon footprint.”
Purpose is a Canadian asset management company with more than $11 billion in assets under management. ZERO is the second European domiciled ETF it has rolled out in collaboration with white-label ETF provider HANetf following the Medical Cannabis and Wellness UCITS ETF (CBDX LN) launched in January 2020.
London-based HANetf intends to apply its HANzero carbon offset overlay approach to future ETF launches where appropriate.