HSBC Asset Management (HSBC AM) announces the launch on the Italian Stock Exchange of the HSBC World ESG Biodiversity Screened Equity UCITS ETF fund, the first of its kind. The fund intends to offer investors a tool to incorporate biodiversity-focused considerations into their portfolios by investing in companies with strong biodiversity credentials (compliant with Article 8 of the SFDR classification).
The new product replicates the series ofEuronext ESG Biodiversità Screened Index, jointly developed by HSBC, Euronext and Iceberg Data Lab (IDL). They are the first biodiversity-screened investable benchmark indices based on a broad range of equities. The benchmark index is the Euronext World Index.
How the companies within the fund are selected
The fund applies three exclusion filters related to biodiversity:
- Socially responsible investments: a filter designed to include biodiversity considerations (such as pesticides, hunting and whaling, etc);
- Negative ESG Screening: removes 25% of the worst stocks using the Sustainalytics risk performers methodology;
- IDL Corporate Biodiversity Footprint.
IDL’s Corporate Biodiversity Footprint (CBF) methodology uses the Mean Species Abundance to obtain the biodiversity score and evaluates four of the most relevant threats for biodiversity itself: climate change, land use, air pollution and water pollution.
Once all filters have been implemented, the ETF will consist of top 500 companies who obtain the best performances in terms of Corporate Biodiversity Footprint and Sustainalytics ESG risk score, while not participating in the exclusions applied by the reinforced filter for socially responsible investments. Detailed and complete data on biodiversity are not yet available, which makes it necessary to carry out several screenings to identify risks related to biodiversity. As data availability and quality increases, HSBC’s Responsible Investment team will strive to continually improve screening methodology.
A step forward in the fight against the biodiversity crisis
“This ETF is the latest in our range of sustainable tools that we are developing for the benefit of our investors to enable them to create portfolios that address significant environmental issues such as biodiversity and climate change. We have an enormous task to play in the protection and conservation of biodiversity, goals that can be achieved through ‘biodiversity-conscious’ investment processes. We hope that this ETF represents a step forward in the fight against the biodiversity crisis, ”he said Stefano CaleffiHead of Southern Europe ETF Sales, HSBC Asset Management.
“We are delighted to have partnered with HSBC AM to create the world‘s first ETF to track the Euronext ESG Biodiversity Screened World USD Index. It is part of the first series of investable biodiversity screened equity benchmark indices, which allow investors to assess the impact of companies on nature beyond traditional ESG risk metrics “he added. Patrick KondarjianGlobal Head of ESG Sales, Markets & Securities Services, HSBC.