Industry Updates

Invesco tightens ESG metrics on solar energy ETF

Companies involved in certain business activities face exclusion

Theo Andrew

a large solar panel

Invesco has tightened the ESG metrics on its solar energy ETF following changes by index provider S&P Dow Jones Indices (SPDJI).

Effective 1 June, the Invesco Solar Energy UCITS (ISUN), which tracks the MAC Global Solar Energy index, will exclude companies involved in certain business activities and those with an S&P Governance Score Screen of less than five.

The changes were decided upon following a consultation with market participants conducted by SPDJI.

Companies that have direct revenue sources from sectors including adult entertainment, alcohol, gambling, and tobacco will be excluded, as will those from certain defence and weapon industries including biological weapons and nuclear weapons.

Elsewhere, companies involved in arctic drilling, coal and nuclear power will also face exclusion.

Furthermore, any stocks which breach an indirect ownership threshold of 20% will also be excluded from the index.

The changes are not expected to impact ISUN’s total expense ratio (TER) of 0.69%.

The ETF, which currently has $85m assets under management (AUM), aims to track the performance of companies globally within the solar energy industry.

It currently holds 43 stocks with over half of the ETF exposed to the information technology sector (51.9%), followed by industrials (22.5%) and utilities (20.8%).

Launched in August 2021, ISUN has returned -15.4% since inception.

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