Industry Updates

Invesco raises sustainable investment levels on Paris-Aligned and multi-factor ETFs

PAB thresholds will rise from 50% to 80%

Theo Andrew

a group of wind turbines in the sky

Invesco has become the latest asset manager to raise the sustainability thresholds across ETFs as rules on sustainable levels continue to evolve.

In a notice to shareholders, the firm said it raised the levels on its Paris-Aligned Benchmark (PAB) ETFs following clarifications from the European Commission on how sustainable investments can be measured.

Under the changes, investments can now be measured at the company level and not only at the level of a specific activity.

As a result, the range – which houses the $410m Invesco MSCI Japan ESG Climate Paris Aligned UCITS ETF (PAUJ) – will see its minimum sustainable investment increase from 50% to 80%.

The $105m Invesco MSCI Emerging Markets ESG Climate Paris Aligned UCITS ETF (PAEM) will see its level rise from 40% to 60%.

Invesco said it will also raise the thresholds on its multi-factor ETF range after “monitoring” the percentage of the funds' net asset value in sustainable investments.

Four ETFs, including the $224m Invesco Quantitative Strategies ESG Global Equity Multi-Factor UCITS ETF (IQSA), will see their sustainable thresholds rise from 10% to 50%.

Meanwhile, the Invesco EUR Government and Related Green Transition UCITS ETF (EGVA) will see its minimum levels increase from 10% to 20%.

Invesco said no changes to the investment policies of the ETFs were made as a result of the changes.

In August, Amundi said it was increasing the threshold on 46 ESG and climate ETFs following discussions with industry stakeholders.

However, the French asset manager’s minimum threshold across its PAB range remains significantly lower than Invesco’s at 40%.

Last November, both asset managers downgraded their ETF ranges ahead of the implementation of ‘level 2’ of the Sustainable Finance Disclosure Regulation (SFDR) in January this year.

In April, the European Commission clarified PABs and CTBs are deemed to provide ‘sustainable investments’.

The new changes to the minimum sustainable investment levels come as the European Commission is considering ripping up current SFDR rules which have left asset managers confused in recent months.

Under the proposals, the European Commission may consider turning SFDR into a labelling regime akin to the Financial Conduct Authority’s Sustainable Disclosure Regulation.

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