HSBC Asset Management (HSBC AM) has launched two funds as part of a new range of sustainable fixed income exchange-traded funds (ETFs).
The HSBC Bloomberg EUR Corporate Sustainable Bond UCITS ETF launched on the London Stock Exchange (LSE) yesterday, while the HSBC Bloomberg USD Corporate Sustainable Bond UCITS ETF is set to launch tomorrow, 19 November.
Both track Bloomberg MSCI Corporate SRI ESG-Weighted Indices (USA & Europe) and seek to provide exposure to the diversified corporate bond universe.
According to the firm, further listings in Europe are expected in the following weeks.
The funds have a carbon emission intensity reduction target of over 40% and an ESG score improvement target of over 10% for the European fund and 15% for the US fund, relative to their indices.
The indices’ incorporate three of Bloomberg’s existing ESG index approaches, alongside an additional carbon screen.
A carbon intensity filter will remove issuers involved in controversial industries, and those with poor ESG practices, and tackle the most immediate environmental issues by excluding the worst carbon emissions offenders.
This ensures an overweight position on ESG leaders and an underweight position on laggards.
“Demand for sustainable investment products has again grown exponentially this year. Facilitating our clients’ transition to more sustainable low-carbon investments is a clear strategic priority for us,” said Olga de Tapia, global head of ETF sales at HSBC AM.
The funds’ will also screen for socially responsible investment to facilitate the exclusion of issuers involved with weapons, tobacco, alcohol, thermal coal, nuclear energy, breaches of UN Global Compact (UNGC) principles, gambling, and adult entertainment.
The funds use best-in-class ESG screening to remove companies with poor ESG scores relative to peers.
“Investors have a key part to play in the global transition to a net zero economy by allocating capital away from firms with poor ESG practices and pressuring issuers to improve transparency,” added Erin Leonard, head of sustainability at HSBC AM.
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