Nuveen ‘net zero’ ETF includes oil and gas holdings

Seeks to decarbonize by engaging with high emitters

A new ETF from Nuveen is investing in companies that are, or are likely, to be part of the energy transition.

That includes “high carbon emitters,” including oil and gas companies, according to the company’s announcement and the product’s portfolio positions.

That category is one of three the fund seeks to hold, with others being “climate leaders” and companies that provide disruptive technology, Nuveen stated in its June 24 announcement.

The Nuveen Global Net Zero Transition ETF defines climate leaders as companies that Paris-aligned carbon reduction plans as well as those “with a credible intention to reducing carbon”.

Among the active ETF’s top holdings is Shell plc, which represents about 2% of the portfolio. Other top position are in Microsoft (4.3%), Amazon (3%), Walmart (2.3%), Eli Lilly & Co (2.1%) and Merck & Co (2%).

“Today, a confluence of scientific conviction, societal consensus, energy security policy and business practice is all centered on the reality that reducing harmful carbon emissions is absolutely critical to the future of the planet.

“These forces represent a powerful tailwind for our strategy as more investors prudently realize the urgently needed transition to net zero will inevitably create market winners and losers.

“Through our engagement process, we will seek to decarbonize the portfolio at a rate faster than that of the market to achieve net-zero carbon ahead of the Paris Agreement 2050 deadline,” Nuveen’s head of ETF product Jordan Farris said in the company’s announcement.

“Importantly, the fund serves as an effective voice for investors who are concerned about climate issues and want to drive change through their investments.”

The ETF will focus its engagement work on the companies with the highest carbon emissions, the company stated.

That includes holding meetings with portfolio companies, recommending changes, monitoring progress and voting on shareholder proposals on climate change, according to the announcement.