Invesco has proposed switching its US and Euro corporate bond ETFs to indices with environmental, social and governance (ESG) metrics, ETF Stream can reveal.
Under the proposals, the $16m Invesco USD Corporate Bond UCITS ETF (PUIG) and the $40m Invesco Euro Corporate Bond UCITS ETF (PSFE) will be renamed the Invesco USD IG Corporate Bond ESG UCITS ETF and Invesco EUR IG Corporate Bond ESG UCITS ETF, respectively.
PUIG will see its underlying index switch from the Bloomberg USD IG Corporate Liquidity Screened Bond index to the Bloomberg MSCI USD Liquid Corporate ESG Weighted Bond index while PSFE will swap from the Bloomberg Euro Corporate Bond index to the Bloomberg MSCI Euro Liquid Corporate ESG Weighted Bond index.
Like the incumbent indices, the new benchmarks offer exposure to investment grade, fixed-rate, taxable bonds from financial, industrials and utilities issuers in their respective currency denominations – with market cap constraints differing between sectors.
The new indices differentiate by applying ESG criteria which negatively screen against issuers with involvement in restricted business activities such as tobacco, weapons, thermal coal and oil sands.
These announcements came with notice of extraordinary general meetings to be held on 2 February, where shareholders will vote on the proposals.
Matthew Tagliani, head of EMEA ETF product and sales strategy at Invesco, told ETF Stream: “We are proposing a rebenchmarking of these ETFs in response to increasing investor demand for fixed income products that incorporate ESG.
"This rebenchmarking, if approved by investors, will bring our USD and EUR Corp Bond products into line with the Invesco USD High Yield Corporate Bond ESG UCITS ETF (UHYD) we launched in July 2021.”
PUIG and PSFE switching index would also expand the firm's core corporate bond ESG ETF range, with the Invesco GBP Corporate Bond ESG UCITS ETF (IGBE) launching in February 2020.
If passed, the proposals would also see Invesco become the sixth issuer to carry out ESG index conversions since September last year, and would take the total number of ESG switches during that period to 30.