State Street Global Advisors (SSGA) has introduced an emerging markets equity ETF in Europe as part of its suite of climate-focused funds that are aligned with the carbon reduction goals of the Paris Agreement.

SSGA now offers six funds within its suite of Paris-aligned equity ETFs.

The SPDR MSCI Emerging Markets Climate Paris Aligned UCITS ETF has been listed on London Stock Exchange in pound sterling (SMPA LN) as well as on Deutsche Börse Xetra (SPF7 GY), Borsa Italiana (MCPA IM), and Euronext Amsterdam (SMPA NA) in euros.

The fund comes with an expense ratio of 0.23%.

The ETF is linked to the MSCI Emerging Markets Climate Paris Aligned Index which is based on the parent MSCI Emerging Markets Index, a broad benchmark comprising large and mid-cap stocks across 24 emerging market countries.

The methodology underpinning MSCI’s Climate Paris-Aligned indices is designed to meet the requirements of EU Paris-Aligned Benchmarks (PAB) while also pursuing opportunities arising from the transition to a low-carbon economy.

The process begins by removing companies that are embroiled in severe ESG-related controversies or have business operations linked to weapons, tobacco, thermal coal, oil & gas, and oil sands.

The remaining securities are then weighted based on the risks and opportunities associated with the climate transition. MSCI harnesses a diverse range of data and analytical tools to aid in index construction including scope 1, 2, and 3 carbon emissions, green revenues, and the index provider’s own proprietary low carbon transition score and climate value-at-risk measures.

The indices offer an immediate 50% reduction in weighted average carbon intensity as well as a further 10% annual decarbonization going forward, aligning with a trajectory to limit global warming to 1.5°C by 2050.

In addition to the above primary objectives, the indices aim to achieve secondary objectives such as maximizing exposure to sustainable energy providers, increasing the weight of companies with clear carbon reduction targets, minimizing fossil fuel exposure, reducing climate value-at-risk by 50%, and maintaining a modest tracking error relative to the parent index.

SSGA offers a further five ETFs within its Paris-aligned suite, targeting global, global developed, US, European, and Japanese stock markets. These funds come with expense ratios ranging between 0.12% and 0.20%.

Each ETF in the suite is classified as an Article 8 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).