This fund has relatively low exposure to ESG risk compared with its peers in the US Equity Large Cap Growth category, earning it the second highest Morningstar Sustainability Rating of 4 globes. ESG risk provides investors with a signal that reflects to what degree their investments are exposed to risks related to material ESG issues, including climate change, biodiversity, product safety, community relations, data privacy and security, bribery and corruption, and corporate governance, that are not sufficiently managed. ESG risk differs from impact, which is about seeking positive environmental and social outcomes.
SPDR MSCI USA Climate Paris Aligned ETF has a sustainability or ESG-focused mandate. Funds with an ESG-focused mandate are more likely to align with the expectations of an investor who cares about sustainability issues. One key area of strength for SPDR MSCI USA Climate Paris Aligned ETF is its low Morningstar Portfolio Carbon Risk Score of 3.97 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.
Spdr Msci Usa Climate Paris Aligned Etf shows 26.1% involvement in carbon solutions. This percentage is high in absolute terms and surpasses the 18.1% average involvement of its peers in the Large Growth category. Carbon solutions include products and services related to renewable energy, energy efficiency, green buildings, green transportation, and so on.
The fund exhibits relatively high exposure (9.87%) 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.
By prospectus, the fund aims to avoid, or limit its exposure to, companies associated with controversial weapons, tobacco, thermal coal, and and small arms. The fund mostly fulfills this goal; however, it does exhibit 0.12% exposure to companies involved in small arms. This compares with 0.46% for its average peer in the US Equity Large Cap Growth category.
United States