Industry Updates

LGIM’s Europe and US equity ETFs become Paris-aligned after index changes

Foxberry made the changes following a consultation with shareholders

Theo Andrew

a tall tower in a city

Legal and General Investment Management (LGIM) has added two ETFs to its Paris-aligned range after changes were made to the index methodology on its US and Europe equity ETFs.

The L&G Europe Equity Responsible Exclusions UCITS ETF (RIEU) and the L&G US Equity Responsible Exclusions UCITS ETF (RIUS) now meet the requirements for the European Union’s Paris-Aligned Benchmarks (PAB) after index provider Foxberry made the changes.

Launched in 2019, the ETFs already focused on companies with high sustainability factor scores and are currently labelled Article 8 under the Sustainable Finance Disclosure Regulations (SFDR).

According to LGIM, the updated methodologies contain exclusions designed to “meet or exceed” the exclusions and decarbonisation trajectory of the PAB.

Under the terms of the PAB, the ETFs will be targeting a 50% reduction in carbon emissions compared with their investible universe, as well as a 7% year-on-year decarbonisation.

RIUS currently has $843m in assets under management (AUM), while RIEU has $97m in AUM.

Foxberry said the changes, which will take effect from 17 June, were approved by its index committee following a consultation with shareholders.  

There has been a significant rise in Paris-aligned ETFs over the past 12 months as asset managers and ETF issuers scramble to green up their portfolios.

Earlier this week, both BlackRock and Franklin Templeton launched PAB ETFs, both labelled Article 9 under SFDR.

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