This article was originally published on ETFTrends.com.
Impact Shares has partnered up with the United Nations Capital Development Fund, the UN agency that makes public and private finance work for the poor in the world’s 47 least developed countries, to expand its line of socially responsible exchange traded funds with a new strategy that adheres to the sustainable development goals outlined by the U.N.
Impact Shares recently came out with the Impact Shares Sustainable Development Goals Global Equity ETF (NYSEArca: SDGA) , which has a 0.76% expense ratio.
The Impact Shares Sustainable Development Goals Global Equity ETF tries to reflect the performance of the Morningstar Societal Development Index, which covers large- and mid-capitalization companies globally that display a commitment to the UN’s Sustainable Development Goals, adhere to the principles of the UN Global Compact, display a commitment to reducing poverty and supporting economic development globally and have exposure to countries with low levels of socioeconomic development, according to the fund prospectus.
“We are proud to partner with Impact Shares and The Rockefeller Foundation to launch the first-ever UN ETF,” UNCDF Executive Secretary Judith Karl said in a note. “As a UN aid agency working in the world’s poorest countries, we are often asked by pension funds and socially-conscious investors how they can use their investment dollars to support the UN Sustainable Development Goals (SDGs). This ETF offers those clients an exciting way to support the UN’s work while rewarding companies with accountable business practices and good management policies. We hope the ETF will encourage more companies to report on environmental, social and governance issues, as well as how their businesses are aligning with the UN SDGs. We also hope the index will grow to include increasingly larger numbers of LDC companies over time.”
SDGA's underlying index screen companies based on a set of rigorous selection criteria reflecting customized environmental, social and corporate governance indicators and alignment with the SDGs.
Specifically, the indexing methodology tries to measure commitment to the UN’s Sustainable Development Goals, adherence to the principles of the UN Global Compact, commitment to reducing poverty and supporting economic development globally and exposure to countries with low levels of socioeconomic development for each company.
The index also implements an Overall ESG Score comprised of a company’s numerical scores for environmental, social and governance criteria. The methodology would exclude those companies that have products involved in adult entertainment, alcoholic beverages, controversial weapons, gambling, military contracting weapons, nuclear energy and small arms, or tobacco; have a detrimental controversy score for incidents related to company involving business ethics, governance, public policy, employee relations, social supply chain, society and community, operations, or environmental supply chain; are not compliant with the principles of the UN Global Compact; and have a below average Overall ESG Score relative to its global industry peers.
Additionally, the underlying index's composition is based on 32 separate social indicators that address issues that has historically been important to the UNCDF. The five major groups include business ethics; employment practices; contractor and supply chain monitoring; community investment and social development programs; and financial inclusion in access to products and services.
“Ever since the United Nations defined its SDGs in 2015, investors have become increasingly interested in strategies that contribute to the realization of these ambitious goals. We’re proud to partner with the UNCDF, an organization that has been advocating for people in the least developed countries for over fifty years. Our ETF will allow investors to align their capital with UNCDF’s efforts to help these countries, including by making loans to small businesses, helping poor individuals access banking services, giving young people job training and loans, and expanding access to clean and affordable energy,” Ethan Powell, CEO of Impact Shares, said in a note.
For more information on new fund products, visit our new ETFs category.
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