Industry Updates

DWS sees ESG metrics tightened on UN SDG ETF range

MSCI has changed the index methodologies

Theo Andrew

Glass globe green ESG climate

DWS will see the ESG exclusion criteria tightened on its seven-strong range of United Nations Sustainable Development Goal (SDG) ETFs following changes made to the underlying indices by MSCI.

Effective 1 September, the seven ETFs will exclude stocks that breach certain criteria thresholds in sectors including adult entertainment, alcohol, gambling, nuclear power, fossil fuel reserves ownership and unconventional oil and gas extraction.

In addition, companies will also be excluded if they have an “insufficient” MSCI ESG controversies score.

DWS, which said it consulted with MSCI on the changes, said it was being made to meet investor expectations around sustainability-related products.

The UN SDG ETF range was launched by DWS in January. 

So far, the ETFs have failed to gain much traction with investors, with the broad-based Xtrackers MSCI Global SDGs UCITS ETF (SDGX) amassing the most assets at £12m.

The UN SDGs – which have 2030 targets – have been labelled “seriously off track” in a recent report with a projected $4trn annual investment needed to achieve them.

Some have also questioned whether the 17 SDGs can be properly aligned to an investment framework such as index tracking methodologies.

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