- Four new ESG Xtrackers ETFs launched.
- The launches build on the success of DWS’s ESG product suite, with the latest annual audit of DWS’s responsible investment efforts identifying over EUR 20 billion in dedicated ESG assets under management globally (1).
DWS is building on its success in the area of responsible investing with the launch of a new range of environmental, social and governance (ESG) Xtrackers ETFs. The four new ETFs provide exposure to ESG-filtered equity indices tracking global, US, Japanese and European markets (see product table).
“Sustainability is one of our key values, which means we not only want to meet demand for responsible investing, we also aim to actively encourage it,” said Petra Pflaum, DWS Chief Investment Officer for Responsible Investments.
The new ETFs track indices that are part of the MSCI ESG Leaders Low Carbon ex Tobacco Involvement 5% series. The indices use extensive filtering based on MSCI ESG research, which means included companies meet strict ESG and low carbon requirements.
For example, for acquiring ESG-filtered global equity exposure the starting point is the MSCI Word Index comprising 1,648 companies (Source, MSCI Inc, 30 April, 2018). Two screening methodologies are applied to the companies in the index, one based on ESG requirements and one based on carbon emissions. Companies with exposure to nuclear power, controversial weapons or tobacco production are excluded, as are companies with excessive revenues (USD 1 billion or 50% of revenues) coming from areas such as alcohol, gambling or conventional weapons. Remaining companies are then given an ESG rating relative to peers, with those below a certain threshold excluded. A ‘controversies screen’ is also applied to exclude companies deemed to be involved in serious ESG controversies. The carbon emissions screening methodology is based on assessments of current emissions and potential emissions and is designed to filter out the most carbon intensive companies. The final ESG/low carbon MSCI World-derived index, which the Xtrackers ETF tracks, comprises 635 companies from the original 1,649, weighted by market capitalisation (Source: MSCI Inc, 30 April 2018).
At DWS the incorporation of ESG factors - beyond financial factors - is integrated into the investment decision making process for liquid and illiquid products. DWS manages over EUR 20 billion of dedicated ESG assets under management, including seven sustainable and impact funds investing in sectors such as clean energy, energy storage and water as well as real estate investments in certified green-labelled buildings (1).
The new Xtrackers ESG equity ETFs complement the existing Xtrackers II ESG EUR Corporate Bond UCITS ETF, which is also based on a comprehensive MSCI screening process.
DWS earlier this year converted one of its actively managed funds into a dedicated ESG fund by adopting the firm’s internal ESG investment minimum standards. The Deutsche Invest I Euro Bonds (Short) fund became the Deutsche Invest I ESG Euro Bonds (Short) fund.
(1)Source: Deutsche Bank Non-Financial Report 2017