UN-Based Socially Responsible ETF Debuts

September 24, 2018

Socially responsible-focused issuer Impact Shares has rolled out its third ETF today. The firm partnered with the United Nations Capital Development Fund to bring the Impact Shares Sustainable Development Goals Global Equity ETF (SDGA) to market.

The new ETF comes with an expense ratio of 0.76% and lists on the NYSE Arca.

SDGA tracks the Morningstar Societal Development Index, which looks to target companies that seek to align with the Sustainable Development Goals laid out by the UN and with the principles of the UN Global Compact, while supporting the reduction of poverty and the growth of global economic development. Companies in the index should also have exposure to countries still in the developing phase with regard to their socioeconomic conditions, the prospectus says.

The index must cover stocks from at least three developed or emerging markets, one of which must be the U.S. Additionally, the non-U.S. companies must represent at least 40% of the index. Their development status is determined by the standards used by the World Bank and the International Monetary Fund, according to the document.

Sustainalytics, a firm that evaluates companies based on their environmental, social and governance policies, screens and scores the potential components for the index. It assigns each company a societal development score as well as an overall ESG score, and excludes companies involved in unacceptable business activities, like weapons, tobacco or pornography.

It also screens out companies that are not compliant with UN standards or do not have a high enough overall ESG score. Ultimately, the 200 highest-scoring stocks are selected from the pool of remaining securities and weighted using an optimized method that seeks to maximize exposure to the top-ranked companies, the prospectus notes.

There are two other ETFs that rely on UN standards in their methodologies. The SerenityShares Impact ETF (ICAN) launched in 2017 and so far has less than $5 million in assets under management, while the iShares MSCI Global Impact ETF (MPCT), which is adopting the ticker SDG as of Oct. 23, launched in 2016 and has $38 million in assets. 

Contact Heather Bell at [email protected]

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