KraneShares 90% KWEB Dfnd Outcm Jan26ETF KBUF Sustainability

Sustainability Analysis

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Sustainability Summary

KraneShares 90% KWEB Dfnd Outcm Jan26ETF has a number of attributes that may meet the expectations of sustainability-focused investors, despite some issues worthy of attention.

This fund has rather high exposure to ESG risk relative to its peers in the Options Trading category, earning it the lowest Morningstar Sustainability Rating of 1 globe. Funds with 4 or 5 globes tend to hold securities that are less exposed to ESG risk. Unlike impact, which focuses on generating positive environmental and societal outcomes, ESG risk measures the degree to which investments could be affected by material ESG issues, including climate change, biodiversity, product safety, community relations, data privacy and security, bribery and corruption, and corporate governance.

The fund exhibits relatively high exposure (10.14%) to companies with high or severe controversies. Companies with controversies may be involved in incidents such as corruption, employee abuses, and environmental incidents that have a negative impact on stakeholders or the environment. Severe and high controversies can have significant financial repercussions, ranging from legal penalties to consumer boycotts. In addition, they can damage the reputation of both companies themselves and their shareholders.

One key area of strength for KraneShares 90% KWEB Dfnd Outcm Jan26ETF is its low Morningstar Portfolio Carbon Risk Score of 4.23 and very low fossil fuel exposure over the past 12 months, which earns it the Morningstar Low Carbon Designation. Thus, the companies held in the portfolio are in general alignment with the transition to a low-carbon economy.

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