Smart beta ETF specialist Ossiam has launched the world’s first actively-managed biodiversity food ETF.
The Ossiam Food For Biodiversity UCITS ETF is listed on the Deutsche Boerse with a total expense ratio (TER) of 0.75%.
Physically-replicated, the ETF offers exposure to large and mid-cap developed market equities active in the food sector in areas such as agriculture, manufacturers, retailers, distributors, restaurants, and packaging food producers.
To help construct the investment universe of 250 stocks, Ossiam has partnered with Iceberg Data Lab, an environmental data solutions provider, which issues company-level biodiversity metrics and assesses the impact of businesses depending on their activities and the location of their agricultural land use.
Biodiversity is measured using the Mean Species Abundance (MSA), an indicator of the biodiversity health of ecosystems, which represents the state of the current ecosystem compared to the undisturbed natural state.
Companies improve their biodiversity rating by advancing their practices in four different contributors; carbon emissions, land use which takes space from natural habitats, pollution as nitrogen oxides from fertilizers and freshwater pollution.
Ossiam also works with ESG data providers such as Sustainalytics, Trucost and ISS to maximise the Mean Species Abundance under constraints.
Of the 250-strong universe, the ETF selects approximately 70 stocks across different sectors of the food industry with packaged food producers, restaurants and retail outlets accounting for the largest sectors.
The firm said the ETF has a 99% reduction in negative biodiversity which is equivalent to saving 218 km² of habitat for $100m invested.
Bruno Poulin (pictured), CEO of Ossiam, commented: “To address the increasing destruction of our natural environment, all sectors of the economy must contribute in numerous ways before it is too late.
“The Earth’s population is predicted to reach about 11 billion by the end of this century but if current food production methods and diets are not drastically improved, there are likely to be calamitous environmental, social and political outcomes.
“Mobilising capital and engaging with companies in the broad food and agriculture sectors is one way of making a positive contribution to the immense environmental challenges facing humanity now.”
Matthieu Maurin, CEO and co-founder of Iceberg Data Lab, added: “The Corporate Biodiversity Footprint developed by Iceberg Data Lab captures the most material impacts of food companies and their value chain on ecosystems.
“This quantitative metric allows investors to assess corporates through their primary social contribution, food production and distribution, and their environmental impact, notably the change of land use and contribution to deforestation.”
Thematic ETFs saw a record €9.5bn inflows in 2020, according to data from Morningstar, as more investors looked to gain exposure to the latest megatrends.
Recognising the demand, issuers brought a record 17 thematic ETFs to market last year.