Industry Updates

JP Morgan AM updates exclusionary metrics for Article 9 climate ETFs

$1.2bn global equity CTB ETF will be affected

Theo Andrew

Climate ESG

JP Morgan Asset Management (JPMAM) is updating the exclusionary metrics on two climate transition ETFs in a bid to meet investor expectations of ‘dark green’ Article 9 funds.

The JPM Carbon Transition China Equity (CTB) UCITS ETF (JCCT) and the JPM Carbon Transition Global Equity (CTB) UCITS ETF (JPCT) will see their investment policies updated to reflect the changes from 9 February.

The self-indexed ETFs – categorised as Article 9 under the Sustainable Finance Disclosure Regulation (SFDR) – will continue to implement both values and norms-based screening following the changes.

“Certain investors have minimum exclusion expectations for funds that are categorised as SFDR Article 9. The framework underlying the exclusions applied by the sub-fund will be updated to align with the expectations of investors,” JPMAM said.

“The board believes that updating the sub-funds supplements will provide investors with greater transparency on the exclusions.”

Companies involved in industries such as tobacco production and controversial weapons including anti-personal mines, biological or chemical weapons, cluster munitions, depleted uranium and nuclear weapons will be excluded.

The ETFs will also apply a revenue threshold, excluding companies that generate a certain percentage of their revenue from companies involved in controversial weapons, thermal coal power generation and adult entertainment and gambling.

As climate transition ETFs, the indices are designed to meet the minimum standards of the EU’s Climate Transition Benchmark (CTB), targeting a carbon footprint reduction of 30% and an annual decarbonisation reduction of 7% versus the parent index.

JPCT, which houses $1.2bn assets under management (AUM), returned 23.5% in 2023 versus 23.8% for the MSCI World. Meanwhile, JCCT, which has $4.3m AUM returned -10.3%.

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