UBS Asset Management has partnered with MSCI in developing custom built low carbon indices for its entire socially responsible investment (SRI) range, ETF Stream can reveal.

Effective December, UBS SRI ETFs will track the new MSCI SRI Low Carbon Select 5% Capped indices which implement additional exclusion criteria compared to the previous SRI indices.

Companies excluded include any that own fossil fuel reserves used for energy purposes, any company that has revenue from the mining of thermal coal and its sale to external parties, thermal coal-based power generation, the extraction of conventional and unconventional oil and gas and oil and gas power generation.

Furthermore, any company that is identified as “high-emitters” as per their scope 1 and 2 carbon emissions is also removed.

UBS AM said the global index of the new range reduces carbon emissions by 75% versus the parent benchmark.

Andrew Walsh (pictured), head of ETF and index fund sales, UK and Ireland, at UBS AM, said the key driver behind the move to a more climate-focused range was driven by client demand.

“The sustainable investment space is evolving, with certain themes like climate change being at the top of investors' minds,” Walsh continued. “The appetite for more sustainable products has grown substantially, as have inflows into these funds.

“Increasingly, our clients have expressed a desire for solutions which provide an even more targeted approach to climate change elements.

“This new approach will ensure SRI investors can address their climate change concerns in a very focused way while also addressing the various metrics across the ESG framework.”

The year of ESG

The seven-strong range, which has around $11.1bn assets under management (AUM), offers investors exposure to a variety of regions including global, emerging markets and UK.

The suite includes:

UBS AM’s SRI ETFs is one part of the firm’s overall ESG ETF suite which also offers exposure to MSCI ESG universal, select and leaders indices.

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