DWS has switched the underlying indices on two corporate bond ESG ETFs to ones incorporating Paris-aligned benchmark (PAB) criteria.
Effective 1 November, the $120m Xtrackers ESG USD Corporate Bonds UCITS ETF (XZBD) will change its name to the Xtrackers USD Corporate Bond SRI PAB UCITS ETF and will switch from tracking the Bloomberg MSCI USD Liquid Investment Grade Corporate Sustainable and SRI index to the Bloomberg MSCI USD Liquid Investment Grade Corporate Sustainable and SRI PAB index.
On the same day, the $66m Xtrackers ESG USD Corporate Bond Short Duration UCITS ETF (XYLD) will be renamed the Xtrackers USD Corporate Bond Short Duration SRI PAB UCITS ETF and change from replicating the Bloomberg MSCI USD Corporate Sustainable and SRI 0-5 Years index to the Bloomberg MSCI USD Corporate SRI 0-5 Years PAB index.
Both ETFs will retain their tickers and total expense ratios (TER) of 0.16% apiece.
DWS added the methodology changes would see the ETFs upgraded from Sustainable Finance Disclosure Regulation (SFDR) Article 8 to Article 9.
The new indices will represent a 50% initial greenhouse gas emission reduction relative to their parent indices and will target an additional 7% decarbonisation each year.
Bond issuers without MSCI reported or estimated greenhouse gas data and those passing certain MSCI environmental controversy scores are also excluded from the indices.
XZBD and XYLD become only the latest ETFs to go ‘dark green’ after DWS announced last week it would also give its $724m Xtrackers ESG EUR Corporate Bond Short Duration UCITS ETF (XZE5) an overhaul to include PAB criteria.
In September, the firm expanded its PAB range with the launch of US, Europe and Japanese equity ETFs.
A month earlier, DWS CEO Stefan Hoops took to LinkedIn to criticise media coverage of greenwashing allegations levelled against its asset management business.