In Brief

Global X adds green-building ETF

Demand for new housing in urban areas will only rise, the company says

A new exchange-traded fund from Global X seeks to invest in the green-building market, the company announced Wednesday.

The need for lower-carbon dwellings is projected to ramp up in the coming years, with the world’s population on track to reach nearly 10bn people by 2050, most of whom will reside in urban areas, the company stated, citing data from the United Nations.

By that time, the housing stock will need to double in order to accommodate growing demands for place for people to live and work, Global X said.

The Global X Green Building ETF, which has an expense ratio of 45 basis points, will “invest in companies that are positioned to benefit from increased demand for buildings that reduce or eliminate negative impacts, and/or create positive impacts, on the natural environment, including green building development, green building management and green building technologies and materials.”

Some urban areas will be more affected by changing climate and rising sea levels, the firm noted. Buildings account for 38% of energy-related carbon emissions across the world as well as half of all extracted materials, making the area “key to reducing building-related emissions and improving urban resiliency in the face of climate change.”

Global X’s thematic growth line of 35 ETFs represent more than $19bn in assets under management, according to the firm.

Dimensional preps low-carbon ETFs

The products cover a range of asset classes

Dimensional Fund Advisors is preparing a line of four sustainability-themed ETFs to add to its product suite.

The Austin, Texas-based firm on April 7 filed with Securities and Exchange Commission for the ETFs, which could launch as soon as 75 days afterward. Those products include the Dimensional US Sustainability Core 1, International Sustainability Core 1, Emerging Markets Sustainability Core 1 and Global Sustainability Fixed Income ETFs.

A theme across the ETFs is lower emissions exposure than in comparable products, the company said in an announcement that accompanied the SEC registration. The ETFs “are designed to target measurable sustainability goals while seeking broad diversification, efficient cost management and higher expected returns”, the company stated.

“Our teams have conducted extensive research into ESG considerations and developed a measurable approach to systematically integrating sustainability data into our portfolios,” Dimensional co-CEO and chief investment officer Gerard O’Reilly said in the company’s announcement. “Our approach applies what we believe is the best available data to help investors incorporate their sustainability values in portfolios without sacrificing sound investment principles.”   

Total fees for the ETFs range from 18 basis points to 41 bps, according to initial prospectus filed with the SEC.

State Street launches active muni ESG fund

The fund will invest in investment-grade, tax-exempt municipal bonds

State Street Global Advisors has launched an actively managed exchange-traded fund that invests in municipal bonds according to environmental, social and governance standards, the SPDR Nuveen Municipal Bond ESG ETF.

The fund is designed to invest in municipal securities from issuers that are leaders in their sector at delivering environmental, social and governance outcomes or whose proceeds are used for positive environmental or social projects.

[More: MSRB ponders ESG disclosure for muni bonds]

The fund will trade under the ticker MBNE and will invest in investment-grade, tax-exempt municipal bonds that mature in two to 17 years.

SSGA Funds Management Inc. serves as investment adviser to the fund and Nuveen Asset Management serves as investment sub-adviser. Nuveen is a unit of TIAA.

[More: VanEck launches first sustainable muni ETF]

CalSTRS ramps up pressure on diversity and climate

The pension will vote against all-male boards and those not reporting in line with the TCFD

California’s teacher pension fund is the latest big investor planning to crack down on public companies that aren’t moving quickly enough on climate change or to increase their board diversity.

On Wednesday, the more than $318bn California State Teacher’s Retirement System (CalSTRS) announced it would vote against boards if their companies do not report Scope 1 and 2 emissions in accordance with the Task Force on Climate-Related Financial Disclosures.

The pension fund will also vote against entire boards of directors if those boards do not include at least one woman, and against directors on nominating committees for companies that do not have women representing at least 30% of the board, according to the announcement. The same is the case for nominating and governance committee members for Russell 1000 companies that do not publish diversity figures for their boards.

“As a global investor committed to the promise of a secure retirement for California’s public educators, we must act responsibly to ensure corporate directors are accountable for creating long-term value and managing long-term risks,” CalSTRS portfolio manager Aeisha Mastagni said in the announcement.

“We are sending a message that corporate directors must meet high standards in the critical areas of board diversity and climate change. If necessary, we will support a change in leadership to meet these standards.”

Apple’s green bonds invested in carbon-free aluminum

$550m of the company's 2019 green bond have been allocated among 50 projects

Apple’s green bond program has helped develop the world’s first commercially available low-carbon aluminum production, the company said in a recent update.

The company, which began its green bonds program in 2016, has to date issued $4.7bn among three bonds, about $3bn of which has been allocated, Apple stated in a March 24 green bond impact report.

Assets from the first two bonds, issued in 2016 and 2017, have been fully allocated, while about a quarter of the 2019 bond, or $550m, is now invested across 50 projects. Collectively, those projects are estimated to offset or mitigate more than 2.8m metric tons of carbon-dioxide equivalents and will include 700 megawatts of renewable energy capacity, the company stated.

One of the latest – and the one the company is touting – is its investment in Canada-based aluminum maker Elysis, through a 2018 partnership with Alcoa, Rio Tinto and the governments of Canada and Quebec. Apple purchased the first run of aluminum in 2019, which it used to make some of its laptops, the company stated.

Elysis, which uses hydropower in a “carbon-free” smelting process, recently built out a large-scale prototype that allows it to make “commercial purity primary aluminum at scale.”

“The breakthrough technology produces oxygen instead of greenhouse gases, and the achievement marks a major milestone in the production of aluminum, one of the world’s most widely used metals,” Apple stated in its report.

The company is now purchasing more of the aluminum, which it plans to use in making its new iPhone SE.

Other allocations made by the 2019 green bond support a reduction in its Scope 3 emissions, with a clean energy program for its suppliers, which includes training and policy advocacy in Japan, Vietnam and South Korea, the company stated.

“The energy used to manufacture Apple products represents over 70% of Apple’s comprehensive carbon footprint,” the company said. “That’s why we’re investing in programs that help suppliers reduce their energy use and transition to renewable energy.”

abrdn to push for DEI in portfolio companies

The firm will vote against companies lacking ethnic diversity

abrdn is planning to vote against boards that don’t have at least some racial or ethnic diversity, the company stated Monday.

In a statement, the company said it “formalized our intention to require boards of our investee companies in the S&P 1500 and Russell 3000 to have at least one racially or ethnically diverse member, otherwise we will vote against or withhold from the re-election of the nomination committee chair.

“In addition, we will continue to take voting action on all-male boards with a higher expectation of 25% female representation on large cap company boards. We will look to increase this expectation to 30% in 2023.”

The company, formerly known as Standard Life Aberdeen, noted companies with diverse workforces and cultures can attract top job candidates and thus lead to stronger productivity and financial performance.

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