Industry Updates

WisdomTree tightens ESG metrics across self-indexing ETFs

The changes will impact 17 WisdomTree ETFs

Theo Andrew

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WisdomTree has tightened the ESG screening criteria across its self-indexed ETFs including its developed market equities and thematic suites.

The changes, which will add exclusionary metrics to areas including small arms, oil sands, arctic oil and gas exploration and shale energy, will affect 17 ETFs.

Thematics, developed international equities, global emerging market ex-state-owned enterprises and US dividend and core equity ETFs will all be impacted.

In addition to the new areas of exclusion, which will cap revenue generation thresholds at 5%, the level for companies deriving revenue from tobacco and thermal coal activity has also been tightened.

Effective 8 March, companies that generate more than 5% of revenue from thermal coal extraction and coal-based power generation will be excluded, down from 25% of revenue previously.

Similarly, businesses receiving more than 5% of revenue from tobacco distribution or production will be screened out, down from 10% of revenue.

Existing ESG criteria, including the companies involved in controversial weapons and those that violate accepted international norms and standards, will remain.

Earlier this week, MSCI made several changes to its ESG-screened index range following a consultation with the market, as it looked to strengthen the suite’s ESG credentials to reflect regulatory developments in Europe.

The changes impacted BlackRock’s $15bn ESG screened ETF range and also led to the closure of the Xtrackers MSCI Europe Energy ESG Screen UCITS ETF (XSER) after the changes left it with an “extremely small number of constituents”.

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