RBC iShares has expanded and updated its suite of sustainability ETFs in Canada.

Pat Chiefalo, Managing Director, Head of iShares, BlackRock Canada.
The firm has launched three new socially responsible ETFs on Toronto Stock Exchange, rebranded four existing ETFs, and reduced the management fees on six.
ETF launches
The new ‘ESG Advanced’ ETFs are linked to MSCI indices that target Canadian, US, and international developed equities while screening out firms from non-ESG sectors as well as those with poor ESG profiles.
The iShares ESG Advanced MSCI Canada Index ETF (XCSR CN) tracks the MSCI Canada IMI Choice ESG Screened 10% Issuer Capped Index and comes with an expense ratio of 0.15%.
The iShares ESG Advanced MSCI USA Index ETF (XUSR CN) tracks the MSCI USA Choice ESG Screened Index and has an expense ratio of 0.20%.
The iShares ESG Advanced MSCI EAFE Index ETF (XDSR CN) tracks the MSCI EAFE Choice ESG Screened Index and has an expense ratio of 0.25%.
Index construction is based on MSCI’s broad market benchmarks for each respective region – the MSCI Canada IMI Index, the MSCI USA Index, and the MSCI EAFE Index. All three parent indices cover large- and mid-cap stocks, while the MSCI Canada IMI also extends to small-caps.
Companies involved in adult entertainment, alcohol, gambling, tobacco, GMO, weapons, for-profit prisons, predatory lending, and cannabis, as well as those embroiled in severe ESG-related controversies are excluded.
Firms with operations in palm oil, nuclear power, and fossil fuels are also removed unless the company derives a significant portion of revenue from alternative and renewable energy.
The constituents that remain are assigned an ESG score based on the firm’s ability to manage key ESG risks relative to other companies in the same sector. Constituents must have an ESG rating of ‘BBB’ (average) or higher to remain eligible.
The remaining constituents are weighted by float-adjusted market capitalization with a 10% issuer cap on the Canadian index.
ETF changes
RBC iShares has rebranded four existing funds under a new ‘ESG Aware’ ETF family. The ETFs, which target Canadian, US, international developed, and emerging market equities, will continue tracking their existing indices.
The funds employ similar business and controversy screens as the ESG Advanced ETFs described above. The main difference is they use an optimization process to maximize exposure to ESG factors while maintaining a tracking difference within 100 basis points relevant to the parent universe.
The funds have adopted new names and lower management fees, as described below:
iShares ESG Aware MSCI Canada Index ETF (XESG CN); 0.15%
iShares ESG Aware MSCI USA Index ETF (XSUS CN); 0.20%
iShares ESG Aware MSCI EAFE Index ETF (XSEA CN); 0.25%
iShares ESG Aware MSCI Emerging Markets Index ETF (XSEM CN); 0.30%
Furthermore, RBC iShares has reduced the management fees charged on two fixed income ETFs providing socially responsible Canadian aggregate bond portfolios with a focus on short-maturity (1-5 years) or broad maturity exposures.
The ETFs are linked to Bloomberg Barclays indices that harness MSCI’s ESG research to exclude controversial issuers and optimize the remaining portfolio to maximize exposure to ESG factors while maintaining risk profiles similar to the parent indices.
These funds and their new management fees are outlined below:
iShares ESG Canadian Short Term Bond Index ETF (XSTB CN); 0.15%
iShares ESG Canadian Aggregate Bond Index ETF (XSAB CN); 0.15%
Pat Chiefalo, Managing Director, Head of iShares, BlackRock Canada, commented, “Sustainability is becoming a core component of portfolio construction as investors increasingly look to enhance how they invest, and build more resilient portfolios for the future. Sustainable ETFs have simplified and expanded that opportunity. RBC iShares is committed to enabling investor choice by broadening our sustainable investing platform to include new products that will provide investors with advanced ESG screens.”