Invesco Launches Global Climate ETF Backed by Varma

Invesco, a global asset manager, has introduced the Invesco MSCI Global Climate 500 ETF (KLMT) to the New York Stock Exchange (NYSE). This new exchange-traded fund (ETF) focuses on companies that meet certain environmental and climate attributes, such as those that have committed to reduce their greenhouse gas (GHG) emissions. This ETF has been launched with a substantial $1.6 billion investment from Finnish pension insurer Varma, demonstrating strong institutional support and confidence in its ability to drive positive environmental impact. The ETF's objective is to track the MSCI ACWI Select Climate 500 Index. This is part of an attempt to help investors reduce greenhouse gas emissions exposure and increase investments in companies with validated emission reduction targets by the Science Based Targets initiative (SBTi). This is done using the E Pluribus Unum (EPU) meaning out of many, one approach. The process begins by selecting companies to take part in the pilot based on analysis of greenhouse gas intensity and exposure relative to Enterprise Value (GIEV) for the five sectors included in the first phase (focusing on large industrial emitters). The index is a subset of the MSCI ACWI ex Select Countries Index and utilizes a methodology that aims to annually reduce the weighted average greenhouse gas emissions intensity relative to firm value, including cash by 7% and relative to revenue by 10%. The index also increases the weight given to companies with SBTi-approved emission reduction targets and other ESG exclusions. A collaboration between MSCI and Varma, this index is designed to capture companies that adhere to Varma's strategic investment criteria for the energy transition. This targeted strategy reinforces Varma’s continual drive to drive investment into companies that are able to show a significant decrease in emissions. To cater to the rising interest in climate-focused products, especially as governments across the globe are aggressively implementing emissions reduction policies, the launch of such an ETF is a smart strategic move on Invesco's part. By doing this, Invesco is once again proving its deftness within the ESG and shifting capital flow landscape, while aligning itself with ever-increasing global sustainability goals