DWS introduces Paris Climate Agreement-aligned corporate bond ETFs

by | Nov 9, 2022

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DWS has expanded its range of Xtrackers ETFs where the indices tracked are aligned with the goals of the Paris Climate Agreement.

Specifically, the indices of seven existing Xtrackers ETFs have changed, which previously tracked the market for corporate bonds in Euro and US dollars with different maturities and focused on environmental and social standards as well as good corporate governance (ESG).

These ETFs now track indices that meet the requirements for EU Paris Aligned Benchmarks (PAB).An ESG-related exclusion criteria will remain in place as well. The new indices are characterised by the fact that they aim to reduce carbon emissions. Specifically, the ETFs track Bloomberg-MSCI Euro/USD Corporate SRI PAB indices that target a 50 per cent reduction in carbon emissions compared to an equivalent non-ESG market benchmark, as well as a continuous reduction in carbon intensity of seven per cent per year.

The benchmark index includes a semi-annual exclusion process based on bond issuer emissions in addition to the usual monthly rebalancing. The semi-annual process determines which issuers should be excluded from the benchmark Index to ensure compliance with the PAB Regulation.

“The addition of corporate bond indices aligned with the Paris Climate Agreement to our Xtrackers ETF range is an important step. This allows investors to build a portfolio across several asset classes that formulates concrete climate-oriented goals that are also documented,” says Simon Klein, Global Head of Passive Sales at DWS.

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