The first ETF offering an environmental, social and governance (ESG) overlay on gold mining equities is set to launch in Europe next month.
The AuAg ESG Gold Mining UCITS ETF (ESGO) will list on the London Stock Exchange with a total expense ratio (TER) of 0.60%.
Tracking the Solactive AuAg Gold Mining index, ESGO offers exposure to the 25 gold mining companies that perform best on ESG screening metrics provided by Sustainalytics.
Applying an equal weighting methodology, each constituent will hold a 4% weighting in the index.
ESGO has been launched by AuAg Funds via white-label ETF issuer HANetf and will be classified as Article 8 under the Sustainable Finance Disclosure Regulation (SFDR).
HANetf said the introduction of strategies such as this will encourage more virtuous behaviours within the mining industry, including the construction of on-site solar farms, using fuel-cell mining trucks and post-project site restoration.
Eric Strand, CEO at AuAg Funds, commented: “Mining is an industry that has seen vast improvements in all aspects of ESG, but standards vary across regions and companies.
“ESGO helps investors get exposure towards gold mining companies with the best ESG credentials and invest in the sector more responsibly.”
Hector McNeil, co-founder and co-CEO of HANetf, added: “ESG is very important for all types of investments and investors increasingly demand greater clarity and transparency from investment providers.
“There is also a strong investment story to tell when investing in ESG friendly gold miners which is a growth sector partly due to monetary inflation and the green transformation.”
Likely not to be the last product of its kind, ESPO and its successors will face close scrutiny from some investors about the possibility of applying ESG screens to a traditionally high-polluting sector.
The ETF’s arrival follows other recent firsts within the sustainable investing space from HANetf including Europe’s first carbon-offset ETF, the HANetf S&P Global Clean Energy Select HANzero UCITS ETF (ZERO), and the world’s first decentralised clean energy strategy, the iClima Distributed Energy UCITS ETF (DGEN).