ETFGI: World’s first vegan-friendly and climate-conscious Exchange Traded Fund opens for trading

ETFGI: World’s first vegan-friendly and climate-conscious Exchange Traded Fund opens for trading

ESG-investing ETFs
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Animal advocates and environmentalists now have an ethical stock investment option that is both cruelty-free and fossil fuel-free, with the launch of VEGN ETF by Beyond Investing onto the New York Stock Exchange on September 10, 2019.

Animal lovers and people who care about saving the planet are rightly proud of their efforts to embrace plant-based eating, reduce their use of plastic, or implement a range of energy-efficient measures at home or work.

But until now, vegans and environmentalists have had little choice but to profit from animal cruelty and environmental devastation through their investment options. While interest in socially responsible investing (SRI) continues to grow, the availability of financial products that explicitly reject animal exploitation has been limited, if not completely absent in most markets.

The listing of the US Vegan Climate Exchange Traded ETF (ticker VEGN) on September 10, 2019, onto the New York Stock Exchange (NYSE) is set to change that.

An ETF (short for Exchange Traded Fund) is an investment fund which is traded throughout the day on stock exchanges via banks, online brokers and roboadvisors. It goes up or down in value according to the price movements of stocks in the particular index it tracks.

The US Vegan Climate ETF, the first of its kind in the world, has been created by Beyond Investing, a team of experienced vegan finance professionals in the US, Switzerland and the UK. It will track the US Vegan Climate Index (ticker VEGAN) launched by Beyond Investing in June, 2018. This Index takes the Solactive US Large Cap index (a proxy for the S&P 500 Index1) and excludes any stocks whose activities are incompatible with a vegan and climate-conscious approach to investing, replacing damaging stocks with midcap alternatives that meet its ethical criteria.

This means the fund avoids investing in companies whose business models rely on animal exploitation – predominantly testing and animal-derived products – as well as removing fossil fuel and environmental threats such as plastic and agrochemicals, which are harmful to wild animals.

“Our aim is to help vegans and animal activists take the pain out of their portfolios,” explains Claire Smith, CEO of Beyond Investing. “So many compassionate people go to great efforts to avoid buying products that contain animal ingredients or have been subject to cruel testing, but when it comes to their investment options, they’re actively, albeit often unwittingly, supporting companies and industries that exploit and torture animals. Our ETF offers them the opportunity to invest in line with their values. And because we love humans as much as other animals, we have defense and human rights screens as well.”

Compared against the unscreened Solactive US Large Cap Index, the Vegan Climate Index has 61% less carbon, 89% less waste and 83% less water (as calculated on 30 June 2018 by Impact Cubed2).

Being stock exchange listed, VEGN – which has been designed to provide an alternative to a diversified US large cap index tracker – is accessible to investors in most countries, with one notable exception being the EU where the new Packaged Retail Investment and Insurance-Based Products (PRIIPs)’s Regulation has caused US ETFs to be removed from brokerage platforms for retail investors3. To remedy this, Beyond Investors is currently designing an EU-acceptable structure.

Regarding pensions plans, Smith says that for those who have flexibility to select their own investments, it should be possible to include the US Vegan Climate ETF, although people may have to request that their pension provider add it as an option on their platform.

With a total expense ratio of 0.60% the ETF fees reflect the huge amount of research and the creation of a proprietary data set, policies and rules as to what may or may not go into the index and a construction methodology to avoid concentration.

“It requires a lot of detailed work to ensure that all relevant information is collected and analyzed,” explains Smith. “Plus we’re building the index in a robust fashion and providing impact metrics, which demonstrate its social and environmental benefits. These are just some of the ways in which Beyond Investing seeks to differentiate itself from other providers. Once the ETF is launched, we plan to engage with companies to encourage them to make their business practices to be more animal-friendly, by removing animal products from their business lines and improving their services to vegans.”

Smith is also the co-founder of the Beyond Animal integrated digital platform, which aims to accelerate the growth of the global vegan economy. She invests directly in vegan and cruelty-free start-ups via Beyond Impact, a venture capital advisory firm she runs.

Heading US sales of the new ETF is Debra Bouton, an animal activist and former private wealth manager at Morgan Stanley.

The US Vegan Climate ETF will list live on the NYSE on September 10, 2019 with the ticker VEGN. The Lead Market Maker is Wolverine Trading and 15 other Authorised Participants (as indicated below) will be able to trade VEGN.