JP Morgan Asset Management (JPMAM) has become the latest issuer in Europe to an ETF that looks to tackle climate change.
The JPMorgan Carbon Transition Global Equity UCITS ETF (JPCT) is listed on the London Stock Exchange (LSE), Borsa Italiana and Deutsche Boerse, with a total expense ratio (TER) of 0.19%.
JPCT tracks the JPMorgan Asset Management Carbon Transition Global Equity index which offers investors exposure to global stocks that are looking to achieve a meaningful reduction in carbon intensity.
The ETF targets at least 30% less carbon intensity than the MSCI World and a 7% decarbonisation target year-on-year in line with the Climate Transition Benchmark (CTB) framework introduced by the European Union last year.
Created by the firm’s Sustainable Investing and Quantitative Beta Solutions (QBS) teams, the index looks to mitigate the risks of climate change by reducing carbon emissions and moving into opportunities required for the transition to a low carbon world.
The index differentiates leading companies by evaluating their production of direct (scope 1) and indirect (scope 3) emissions, how they manage resources including electricity (scope 2 emissions), water and waste, and other climate-related risk management considerations such as physical and reputational risks.
It incorporates both primary data from companies as well as alternative data sources from ThemeBot.
JPCT will be managed by JPMAM’s QBS CIO Yazann Romahi and portfolio manager Aijaz Hussain.
Olivier Paquier (pictured), head of ETF distribution, EMEA, at JPMAM, commented: “Many investors are considering the carbon transition readiness of their portfolios, coupled with a need to maintain broad diversification, a low tracking error and cost-efficiency.
“This ETF should help meet those needs, as clients look to integrate low carbon transition considerations when investing in global equities.”
Jennifer Wu, global head of sustainable investing at JPMAM, added: “Investing in carbon transition aware strategies needs to start now.
“Differences are emerging, between the potential winners and losers in the low carbon transition, and by acting early, before climate risks and opportunities are fully priced in, investors can capture potentially significant returns as prices continue to adjust.”
JPMAM is the latest ETF issuer in Europe to offer exposure to strategies in line with the EU’s two climate benchmarks.
Lyxor was the first to launch a range of climate change ETFs in March before Amundi, Deka, Franklin Templeton and BlackRock all entered the space later in the year.