gGreen bonds, now part of the bond component of environmental, social and governance (ESG) investments, are growing in popularity, with an emphasis on climate-focused ETFs like the new FlexShares ESG & Climate Investment Grade Corporate Core Index Fund (FEIG).
As more and more companies seek to integrate ESG issues, or more specifically climate control, into their core business principles, it is important to focus on this metric when bonds are offered to the public. As such, this is where an ETF like FEIG can identify opportunities in corporate bonds.
Through FEIG launch sheet, the bottom :
- Is conceived as a cost–effective building block of a portfolio incorporating risk controls to reduce tracking errors and provide market-type exposure relative to the starting universe.
- Apply a multi–Dimensional ESG framework integrating exclusions through ESG controversies and corporate involvement while seeking to make an ESG improvement.
- Uses the Northern Trust ESG Vector Score, which focuses on materiality and compliant with industry standards Accounting Standards Board (SASB) and Tax Force on Climate Related Disclosures (TCFD), including not only historical metrics and indicators, but also those that assess the degree of exposure of a the business may be at future risks and opportunities.
- Intentionally focuses on reducing the risks associated with climate transition by reducing the carbon emissions intensity of the ISS and improving the ISS Carbon risk assessment.
A robust rating methodology
As the universe of corporate bonds expands further, as companies are more likely to borrow money at current historically low rates, it is difficult to sift through them for ESG opportunities. This is where FlexShares exerts its quantitative strength using its vector score.
The vector score essentially identifies the extent to which ESG issues will impact financial performance. Then, greatness is coupled with a company’s orientation in terms of the business risk associated with ESG.
“Part of a range of funds designed to incorporate a comprehensive risk assessment into all important ESG issues and with an intentional focus on reducing the risks associated with the climate transition ”, indicates the launch sheet. build on the Northern Trust ESG Vector Score, which is a solid assessment of financially significant ESG issues incorporating both forward–scrupulous and historical assessment of important financial aspects Environmental, social and governance issues (ESG). The suite also aims to reduce the risk of climate transition of the resulting portfolio. while maintaining exposure comparable to that of the market relative to its respective parent index. “
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