Industry Updates

Invesco to exclude companies missing ESG data from clean energy ETF range

Following changes by index provider Solactive

Theo Andrew

a group of wind turbines

Invesco is set to start excluding companies missing “critical” ESG data from its range of clean energy ETFs following changes to their underlying indices.

Effective 28 February, Invesco said in a shareholder notice the three ETFs affected are the Invesco Global Clean Energy UCITS ETF (GCLE), the Invesco Hydrogen Economy UCITS ETF (HYDE) and the Invesco Wind Energy UCITS ETF (WNDE).

All three ETFs track Solactive’s WilderHill indices which said it was making the changes to comply with the Sustainable Finance Disclosure Regulation (SFDR).

As a result, companies missing data on global standard screening, controversy score, ESG risk ratings and various product involvement fields will be ineligible for index selection.

“Solactive has determined that for the indices to comply with SFDR requirements around good governance practices, companies missing critical ESG data are not eligible for selection,” the index provider said.

Solactive did not disclose how the indices would be impacted following the changes.

HYDE and WNDE launched last September but have so far struggled to gain traction among investors, with $3.8m assets under management between them.

GCLE, which launched in March 2021, also saw its index tweaked early last year in a bid to reclassify the ETF as Article 9 under SFDR.

Meanwhile, Invesco also announced changes to the Invesco Solar Energy UCITS ETF (ISUN) which will reduce the minimum proportion of the ETFs investments that are sustainable from 90% to 70%.

In a separate shareholder notice, Invesco said: “The proposal to reduce the minimum proportion of sustainable investments is the result of new data which has become available to Invesco for use in the calculation of the proportion of sustainable investments within the ETF and is not due to any change to the reference index.”

The ETF currently tracks the MAC Global Solar Energy index and is also labelled Article 8 under SFDR.

All four ETFs have performed well since the turn of the year as investors bet on an improving inflation outlook and slowing interest rate hikes.

HYDE has been the top performer in the range, returning 14.8% year to date, followed by 12.6% for GCLE. Meanwhile, WNDE has returned 8.2% followed by 5% for ISUN.

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