New generation of ESG Indices improving investor access to sustainable investing

HSBC Global Asset Management announced it is launching a new generation of sustainable ETFs. The goal of the new investment products is to provide investors with access to sustainable investing with a cost-efficient exposure to developed and emerging equity markets at global, regional and country levels.

Three of the new ETFs, the HSBC Europe Sustainable Equity UCITS ETF, the HSBC Japan Sustainable Equity UCITS ETF and the HSBC USA Sustainable Equity UCITS ETF1, have already been listed on the London Stock Exchange. Another three ETFs, focused on the developed world, Emerging Markets and Asia Pacific ex Japan, are expected to be launched in the coming weeks, and further listings are planned across key markets in Europe.

The ETFs will track the FTSE Russell ESG Low Carbon Select Indices, which target two areas of carbon exposure – a 50% carbon emissions reduction and a 50% fossil fuel reserves reduction – and aim to achieve a 20% ESG score uplift relative to the parent indices.

FTSE Russell has created several ESG-themes indeces recently, including numerous launches this year. The proliferation of these new offerings by FTSE Russell and other indexers have enabled easier access for investors to sustainable investing options, such as HSBC GAM’s new offerings.

Stephane DeGroote, Managing Director, Head of ETFs & Derivatives business EMEA, FTSE Russell said:

“FTSE Russell worked closely with HSBC Global Asset Management to develop bespoke indexes that integrate ESG ratings, carbon emissions and reserves considerations, paving the way for a new generation of ETFs. HSBC selected FTSE Russell because of our unique index construction approach that incorporates climate and ESG metrics while minimising off-target, consequential exposures – a smart, transparent solution to weighting companies. The index construction is complemented by a robust and traceable ESG scoring methodology.  These ETFs enable investors to participate in the transition towards a low carbon economy, while also balancing governance, social and environmental concerns.”

Commenting on the new launches, and on the growing demand for ESG investing products by investors, Xavier Desmadryl, Global Head of ESG Research at HSBC Global Asset Management, said:

“Investors’ desire to initiate change through sustainable investing continues to grow and long-term equity returns are increasingly driven by companies that effectively implement strong environmental, social and governance practices. We seek to encourage all companies held in our portfolios to establish and maintain high levels of transparency, particularly in their management of ESG issues and risks. Engagement with these companies is an important element in both our ESG integration and our stewardship oversight. These foundations are the driving force behind our new sustainable equity ETFs, which will provide investors with a core sustainable building block for their portfolios.”

Olga De Tapia, Global Head of ETF Sales at HSBC Global Asset Management, added:

“Our new ETF range takes a step beyond traditional sustainable ETF products by tracking indices, developed by FTSE Russell, that follow an innovative three-tilt approach. This approach allows us to capture the benefits of positive inclusion and access companies that are transitioning towards a lower carbon economy.

“Due to the evolution of the energy industry, the indices aim to capture stocks with lower fossil fuel reserves intensity, including alternative energy companies. The indices’ target of a 50% reduction on fossil fuels reserves allows them to include those companies that are at the forefront of this transition.”

HSBC Global Asset Management has over $500 billion in AUM, and a global presence, offering services in 25 countries and territories.