##{"id":91828,"date":"2021-02-25T10:35:03","date_gmt":"2021-02-24T23:35:03","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=91828"},"modified":"2021-02-25T10:35:05","modified_gmt":"2021-02-24T23:35:05","slug":"esg-focus-betashares-launches-green-etf","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2021\/02\/25\/esg-focus-betashares-launches-green-etf\/","title":{"rendered":"ESG Focus: BetaShares Launches Green ETF"},"content":{"rendered":"<p><strong><em>FNArena&#039;s dedicated&nbsp;ESG Focus news section zooms in on matters Environmental, Social &amp; Governance (ESG) that are increasingly guiding investors preferences and decisions globally. For more news updates, past and future:<\/em>&nbsp;<\/strong><br \/><a href=\"https:\/\/www.fnarena.com\/index.php\/financial-news\/daily-financial-news\/category\/esg-focus\/\">https:\/\/www.fnarena.com\/index.php\/financial-news\/daily-financial-news\/category\/esg-focus\/<\/a><\/p>\n<p><u><strong><span style=\"font-family:arial\"><span style=\"font-size:10pt\">BetaShares to launch Climate Change Innovation ETF<\/span><\/span><\/strong><\/u><\/p>\n<p>By Sarah Mills<\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\">This year, 2021, is being touted as the year for renewable energy and the market can expect a lot of activity in electrification and infrastructure.<\/span><\/span><\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\">So it makes sense that BetaShares is about to launch a Climate Change Innovation exchange traded fund (ETF) ((ERTH)), subject to approvals.<\/span><\/span><\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\">Just to put things in perspective, in the last eight months, the European Union has announced the EUR$1trn green deal; Biden has pledged US$5trn; the UK has committed to a net zero emissions target; and China has committed to net zero by 2060.<\/span><\/span><\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\">BetaShares chief executive officer Alex Vynokur stresses the level of impending investment in the&nbsp;press release:<\/span><\/span><\/p>\n<p><em><span style=\"font-family:arial\"><span style=\"font-size:10pt\">&ldquo;It is estimated that the additional investment required to achieve a global zero carbon-emissions economy by 2050 will be US$1-2 trillion (per year) &hellip; in the decades ahead.&quot;<\/span><\/span><\/em><\/p>\n<p><em><span style=\"font-family:arial\"><span style=\"font-size:10pt\">&ldquo;&hellip; these challenges also present opportunities. Our new fund will provide exposure to global companies leading the fight, and likely to benefit from what we believe is a long-term megatrend.&rdquo;&nbsp;<\/span><\/span><\/em><\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\">The ETF is taking a broad view of the climate change challenge and includes several sustainability themes.<\/span><\/span><\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\">ERTH will track clean\/renewable energy; green transportation; water and waste improvements; decarbonisation solutions and sustainable products.<\/span><\/span><\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\">ERTH hopes to provide investors with exposure to global companies at the forefront of climate and environmental themes, and positions itself as an impact fund.<\/span><\/span><\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\">It will also exclude fossil fuels &ldquo;and other negative business activities&rdquo;.<\/span><\/span><\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\"><img decoding=\"async\" class=\"img-responsive maxwidth\" src=\"https:\/\/www.fnarena.com\/ckfinder\/userfiles\/images\/Financial%20Services\/Diversified%20Financials\/grow%20your%20money.jpg\" \/><\/span><\/span><\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\">Announcing the endeavour, BetaShares&#039; Vynokur said:<\/span><\/span><\/p>\n<p><em><span style=\"font-family:arial\"><span style=\"font-size:10pt\">&ldquo;The scale of the challenge the world faces means that innovation is called for in a range of climate- and environmentally-friendly activities. <\/span><\/span><\/em><\/p>\n<p><em><span style=\"font-family:arial\"><span style=\"font-size:10pt\">&quot;A focus on renewable energy is essential, but the deep cuts to carbon emissions that will be required to limit global warming cannot be achieved by clean energy alone.<\/span><\/span><\/em><\/p>\n<p><em><span style=\"font-family:arial\"><span style=\"font-size:10pt\">&ldquo;That&rsquo;s why ERTH will provide broader exposure to a comprehensive list of climate change solutions.&nbsp;This will include not only clean energy but electric vehicles, energy efficiency technologies, sustainable food, water efficiency and pollution control &ndash; in short, a broad range of solutions that directly enable the reduction or avoidance of carbon emissions. This is the essential objective if the world is to effectively address climate change.&rdquo;<\/span><\/span><\/em><\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\">In terms of risk profile, BetaShares says&nbsp;the portfolio consists of established companies that generate the majority of their revenue from products and services that directly enable CO2 avoidance.&nbsp;<\/span><\/span><\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\"><em>The companies have a wide range of business activities, <\/em>says BetaShares&nbsp;&nbsp;<\/span><\/span><\/p>\n<p><em><span style=\"font-family:arial\"><span style=\"font-size:10pt\">Examples include clean energy companies, electric vehicle makers, sustainable food companies and technology-oriented companies involved in batteries, energy storage, fuel cells, electrical components, etc.&nbsp; We would certainly describe all of these as &ldquo;impact&rdquo; solutions, but they are existing solutions and do not fall into the early stage\/start-up category.&nbsp;<\/span><\/span><\/em><\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\">The fund will join BetaShares&rsquo; Global Sustainability Leaders ETF ((ETHI)) and Australian Sustainability Leaders ETF ((FAIR)) and the burgeoning number of ETFs hitting the market globally.<\/span><\/span><\/p>\n<p><span style=\"font-family:helvetica\"><span style=\"font-size:10pt\">Given most of the climate change action is happening offshore, it provides Australian investors with an opportunity to participate in the action in what is shaping up to be a pivotal year.&nbsp;<\/span><\/span><\/p>\n<p><span style=\"font-family:helvetica\"><span style=\"font-size:10pt\">Given BetaShares reputation, it may also offer investors a clear opportunity to avoid greenwashing, although all will be revealed by the fund&rsquo;s stock picks.<\/span><\/span><\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\"><strong>Russell Investments senior portfolio manager James Harwood<\/strong> offers a timely warning about the growing danger of greenwashing to investors, as the climate change theme intensifies.<\/span><\/span><\/p>\n<p><span style=\"font-family:arial\"><span style=\"font-size:10pt\">&ldquo;There has been a marked&nbsp;<\/span><\/span><span style=\"background-color:white\"><span style=\"color:#212529\"><span style=\"font-family:arial\"><span style=\"font-size:10pt\">increase in the demand for environmental, social and governance (ESG)\/sustainable style products and this trend looks set to continue,&rdquo; says Harwood in an Independent Financial Adviser article.<\/span><\/span><\/span><\/span><\/p>\n<p><span style=\"background-color:white\"><span style=\"color:#212529\"><span style=\"font-family:arial\"><span style=\"font-size:10pt\">&ldquo;Unsurprisingly many firms are seeking to capture some of this growth through the launch of new products, but also rebranding of existing funds.<\/span><\/span><\/span><\/span><\/p>\n<p><span style=\"background-color:white\"><span style=\"color:#212529\"><span style=\"font-family:arial\"><span style=\"font-size:10pt\">&ldquo;This has led to concerns of &ldquo;greenwashing&rdquo;, which is the overstating of a product&rsquo;s ESG credentials or misleading investors on how environmentally sound or ethical a fund really is.&rdquo;<\/span><\/span><\/span><\/span><\/p>\n<p><span style=\"background-color:white\"><span style=\"color:#212529\"><span style=\"font-family:arial\"><span style=\"font-size:10pt\">He advises that ESG funds should have two key features:<\/span><\/span><\/span><\/span><\/p>\n<p><span style=\"background-color:white\"><span style=\"color:#212529\"><span style=\"font-family:arial\"><span style=\"font-size:10pt\">Negative screens or tilts &ndash; basically exclusions or underweight holdings; and positive tilts &ndash; an overweight market exposure.<\/span><\/span><\/span><\/span><\/p>\n<p><span style=\"background-color:white\"><span style=\"color:#212529\"><span style=\"font-family:arial\"><span style=\"font-size:10pt\">As usual, the negatives include fossil fuels, alcohol and gambling; while positive tilts might include renewable energy, education or healthcare.<\/span><\/span><\/span><\/span><\/p>\n<p><span style=\"background-color:white\"><span style=\"color:#212529\"><span style=\"font-family:arial\"><span style=\"font-size:10pt\">&ldquo;Another approach is to score companies across a wide range of ESG metrics &ndash; and then overweight stocks that have the highest aggregate ESG scores,&rdquo; says Harwood.<\/span><\/span><\/span><\/span><\/p>\n<p><span style=\"background-color:white\"><span style=\"color:#212529\"><span style=\"font-family:arial\"><span style=\"font-size:10pt\">Meanwhile, he suggests that certification from the Responsible Investment Association of Australasia (RIAA) should provide advisers with a degree of comfort that the product is properly credentialed.<\/span><\/span><\/span><\/span><\/p>\n<p><span style=\"background-color:white\"><span style=\"color:#212529\"><span style=\"font-family:arial\"><span style=\"font-size:10pt\">Harwood also emphasises the diversity within the ESG community and the need for advisers to recognise this.<\/span><\/span><\/span><\/span><\/p>\n<p><span style=\"background-color:white\"><span style=\"color:#212529\"><span style=\"font-family:arial\"><span style=\"font-size:10pt\">&ldquo;Some clients are likely to want very hard exclusions and have nil exposure to fossil fuels and mining for example. Such a client might be evaluated as being &ldquo;dark green&rdquo;, i.e. their ESG beliefs are very hard and take precedence over missed investment opportunities.&rdquo;<\/span><\/span><\/span><\/span><\/p>\n<p><span style=\"background-color:white\"><span style=\"color:#212529\"><span style=\"font-family:arial\"><span style=\"font-size:10pt\">Of course, funds reflect these variable appetites; and investors need to recognise this commitment level when stepping into the ESG and ETF fund market, given the clear risk-reward tilts.<\/span><\/span><\/span><\/span><\/p>\n<p><strong><em>FNArena&#039;s dedicated&nbsp;ESG Focus news section zooms in on matters Environmental, Social &amp; Governance (ESG) that are increasingly guiding investors preferences and decisions globally. For more news updates, past and future:<\/em>&nbsp;<\/strong><br \/><a href=\"https:\/\/www.fnarena.com\/index.php\/financial-news\/daily-financial-news\/category\/esg-focus\/\">https:\/\/www.fnarena.com\/index.php\/financial-news\/daily-financial-news\/category\/esg-focus\/<\/a><\/p>\n<\/p>\n<p><em>Find out why FNArena subscribers like the service so much: &quot;<a href=\"http:\/\/www.fnarena.com\/index4.cfm?type=dsp_newsitem&amp;n=29EB960D-9DFF-C00E-7F6B464E5D52E250\">Your Feedback (Thank You)<\/a>&quot; &#8211; Warning this story contains unashamedly positive feedback on the service provided.<\/em><\/p>\n<p><em>FNArena&nbsp;is proud about its track record and past achievements: <a href=\"https:\/\/www.fnarena.com\/index.php\/2018\/10\/03\/rudis-view-ten-years-on-the-world-is-still-turning\/\">Ten Years On<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>BetaShares has launched a Climate Change Innovation ETF, recognising the anticipated sharp shift to renewable energy over the next two years, and, as the number of ESG funds proliferate, advisers offer tips to investors to help avoid greenwashing<\/p>\n","protected":false},"author":1,"featured_media":91880,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[98],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/91828"}],"collection":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/comments?post=91828"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/91828\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/91880"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=91828"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=91828"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=91828"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}