State Street Global Advisors has launched a new global ESG ‘low carbon’ fund. This will be a passive fund, based on the MSCI low carbon index target index.
This new launch is aimed at the institutional pension market, with trustees coming under increased pressure to take environmental, social and governance factors into account as part of their investment process.
This index aims to balance risk and returns by targeting a blend of smart beta factors as well as ESG characteristics. It targets five established equity factors including improved ESG scores, a reduction in carbon emissions and reserves intensity.
This fund will sit within the State Street authorised contractual scheme range, allowing UK pension fund to benefit from the favourable double tax agreements available to them.
State Street Global Advisors head of equity indexed strategies Ana Harris says: “In recent conversations with clients and investors certain key themes arise.
“First we know that there is a clear need for additional returns while being mindful of risk. Second, ESG considerations are becoming an imperative, both from an aspirational point of view, but also because of the potential cost impact of ESG-related risks.
“Broader stakeholders and regulators are also taking a keener interest in these topics and encouraging asset owners to take action.”
Guido Giese, executive director, applied equity research MSCI says that this index aims to incorporate ESG-based and carbon-based constraints in a bottom-up index construction approach.
State Street Global Advisors head of UK pensions Jenny Yoe adds: “As a firm, we believe that what is fair for people and sustainable for the planet can deliver long term performance. The launch of this fund based continues to build on our belief and commitment to ESG and delivering these capabilities to our clients and the wider market.