The greenies are moving in: World’s first carbon avoidance ETF to launch on LSE

Greenwash, it certainly seems, is not just part of the political agenda in Western countries, but very much part of the corporate agenda too.

Many companies seeking to improve their image and demonstrate that they aren’t perceived as relics, throwbacks to the power-dressing era of the 1980s or that they are not profligate are now using the green agenda as a method of improving their commercial image.

As a result, some of marketing executives within the image conscious firms within the electronic financial markets sector have been tripping over their mung beans and fair trade coffee to come up with suitable products with which to approach this rapidly growing dynamic.

Approaching this market has just become a little more complex, however, as the large and established firms now have specialist green entities to contend with. Thinking of enjoying that nice steak during a lunch meeting? Nut loaf doesn’t do it for you? Rotten luck….

Impact fintech business, iClima Earth, will launch the world’s first ESG UCITS exchange traded fund that provides exposure to companies offering products and services that enable CO2e avoidance solutions, and quantify that impact.

iClima Earth describes itself as a green fintech that creates investment products targeting companies that make impactful contributions to solving climate change.

The iClima Global Decarbonisation Enablers UCITS ETF (ticker: CLMA) will launch via the HANetf platform and will list on the London Stock Exchange in early December. CLMA will be the first ESG focused ETF issued by HANetf.

Gabriela Herculano, CEO of iClima Earth said “We are proud to announce the launch of the iClima Global Decarbonisation Enablers UCITS ETF to redefine climate change investments. This is the world’s first climate change UCITS ETF that provides exposure to companies offering products and services that enable CO2e avoidance, and quantifies the impact of those companies in meeting decarbonisation targets.

The CLMA ETF is unique as it shifts the focus from the companies reducing their own emissions, to companies offering products and services that directly enable CO2e avoidance solutions, shining a spotlight on climate change innovators.

iClima Earth estimates that the 151 companies in the iClima Global Decarbonisation Enablers Index can potentially avoid over 0.6 Gigatonnes of C02e in 2021 – the planet needs to avoid 4.26 Gigatonnes of new emissions in 2021 to reach the goal of limiting global warming to 1.5 degrees Celsius.

Climate change and the transition to a low carbon economy are part of one of the largest megatrends of the 21st century. Green investments are being fuelled by regulatory actions such as the 2015 Paris Agreement as well as consumer preferences such as veganism and telepresence. To meet the goals of the Paris Agreement, investment into green investments needs to triple from current levels.

There are many ‘green’ investment products already on the market that use complex ESG scores or focus on low-carbon companies doing less harm. However, the best way to reduce CO2e in the atmosphere is to find lower-emission alternatives to products and services, thereby ‘avoiding’ emission.

In order for the world to reach net-zero by 2050 and have a chance of limiting global warming to 1.5 degrees Celsius above pre-industrial levels, iClima Earth says that large amounts of investment are necessary into new technologies and companies that will reduce and avoid carbon emissions.

As a result, CLMA provides exposure to these companies across five subsectors including green energy, green transportation, water and waste improvements, decarbonisation enabling solutions and sustainable products. This includes high growth solutions like green hydrogen & fuel cells, distributed generation and electric vehicles.

The ETF has a TER of 0.65% and tracks the iClima Global Decarbonisation Enablers Index, developed by iClima Earth.

The index was built using a tiered approach, meaning there is no over-exposure to large cap companies and it provides a balanced exposure to the key climate change solutions. The iClima Global Decarbonisation Enablers Index is up 64.5% over the last 12 months. Past performance is no guarantee of future performance.

Gabriela Herculano, CEO of iClima Earth continued “Much has been said about the greenwashing that takes place across the investment industry. iClima not only changes the narrative of low carbon investments, but it alters the landscape of sustainable investments by quantifying impact. iClima has developed a methodology to quantify the CO2e avoidance potential of companies, a tangible measurement of impact in gigatons of CO2e. This is the first ETF to quantify the C02e impact it generates of potentially avoided emissions for each company in the index and the index as a whole.”

Nik Bienkowski, Co-CEO of HANetf said “HANetf is delighted that iClima Earth choose us to help them develop and launch the world’s first decarbonisation ETF and it will be the first of many on the HANetf platform. This is a unique ETF which leans in to the theme we talk about every day – limiting climate change. CLMA is a unique as it allows investors to make a real impact investment via an ETF.

As this is traded on London’s most prominent listed derivatives venue, it certainly seems that in future, the only hot air will be that emanating from Boris Johnson’s mouth.