UBS Asset Management (UBS AM) has released the UBS ETF S&P 500 Climate Transition ESG UCITS ETF, showing a major step for investors focused on sustainability in Europe. This ETF is the first exchange-traded fund under UCITS to follow an index specifically created to align with the S&P 500 universe. It caters to investors wanting exposure to large-cap US equities while emphasizing net zero alignment and a better environmental, social, and governance (ESG) profile.
The UCITS ETF achieves its climate objectives by following the S&P 500 Climate Transition Base ESG Index. This carefully crafted index picks and prioritizes its components to align with the shift to a low-carbon and climate-resilient economy. The selection process happens in two stages. Initially, the index removes companies that have clearly violated UN Global Compact principles or exceeded revenue thresholds in controversial industries such as weapons manufacturing, tobacco production, and fossil fuels.
After this first screening, the remaining companies are then included in the index through an optimization process. This process prioritizes a significant 30% initial reduction in carbon intensity, followed by a mandated 7% year-on-year reduction trajectory. This guarantees a steady and substantial decrease in the fund’s overall carbon footprint over time. The optimization process also aims to achieve secondary objectives that enhance the fund’s ESG credentials, including prioritizing companies with ambitious science-based carbon reduction targets and attaining a noteworthy 20% improvement in the overall ESG score of the fund.
The UBS ETF S&P 500 Climate Transition ESG UCITS ETF is classified as an Article 9 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR). This classification signifies that the fund aligns with ambitious sustainability goals, making it an attractive choice for investors seeking to align their portfolios with positive environmental and social impact. The fund is available across key European exchanges in USD (CT500 SW), EUR (BCFG GY), and GBP (CT5G LN) share classes. The expense ratio is set at 0.07% for the non-hedged share class and 0.10% for the currency-hedged share classes.
