Europe’s first carbon-offset ETF to launch in London
A new exchange-traded fund is listing in London that will be the first in Europe to offset any carbon emissions from the index it is tracking.
The HANetf S&P Global Clean Energy Select HANzero UCITS ETF (LON:ZERO) is being launched by HANetf and Purpose Investments and will track the S&P Global Clean Energy Select index, which measures the performance of 30 of the largest companies in global clean energy related businesses.
On top of this, the ETF will incorporate carbon offsetting so that any carbon emissions linked to the underlying securities will be compensated by buying carbon credits from certificated climate-positive offset projects selected by South Pole, a Zurich-based offsetting specialist.
Using the monthly ‘carbon to value invested’ data for the index published by S&P DJI, HANetf said it will calculate a daily accrual which will then be offset with offset credits.
It added that the projects selected by South Pole are upheld to the standards set by the International Carbon Reduction and Offset Alliance (ICROA) and are subject to full screening, third party auditing and in house due diligence.
The ETF’s total expense ratio (TER) will be 0.55%, with associated costs of the offsetting taken from the TER and so will not impact performance, HANetf said.
HANetf said that due to “the uniqueness of this offering” it is trademarking the process as HANzero, which it now also intends to apply to future ETF launches.
Under the HANzero programme, HANetf said it will initially make contributions to two projects: the conservation of the Topaiyo rainforest in Papua New Guinea and the Musi River hydro plant on the island of Sumatra, Indonesia.
The ETF is due to start trading in London before the end of June and will be passported across Europe, scheduled Article 8 under the EU’s Sustainable Finance Disclosure Regulation (SFDR), which is reserved for those funds that promote environmental or social characteristics but do not have them as the overarching objective.
“Environmentally conscious investors can now target capital growth with the HANetf S&P Global Clean Energy Select HANzero™ UCITS ETF, ZERO, safe in the knowledge that any carbon emissions linked to their investment will be offset in some exciting global climate positive projects,” said Nik Bienkowski, co-founder and co-CEO of HANetf.
He added that is was the first ETF in Europe with the ability to offset carbon and that HANzero is “maybe our most impactful innovation to date”.
Som Seif, founder and CEO of Purpose Investments, said with the election of President Biden increasing optimism about green policies and the global consensus solidifying behind the fight against climate change, the ETF “not only delivers access to the most exciting pure-play clean energy companies but it offers an article 8 product under SFDR and the opportunity to remove an investor’s carbon footprint”.