Impact fintech business iClima Earth has unveiled the world’s first carbon avoidance exchange traded fund (ETF).
The iClima Global Decarbonisation Enablers UCITS ETF (CLMA) targets exposure to companies offering products and services that enable CO2e avoidance solutions, and that will contribute to the goal of limiting global warming to 1.5 degrees Celsius.
The new strategy will be launched via the HANetf platform, and will list on the London Stock Exchange in early December. It has a total expense ratio of 0.65 percent, and will track the iClima Global Decarbonisation Enablers Index, developed by iClima Earth.
The 151 companies in the iClima Global Decarbonisation Enablers Index are expected to contribute over 0.6 gigatonnes to potential CO2e avoidance solutions in 2021. The iClima Global Decarbonisation Enablers Index is up 64.5 percent over the last 12 months.
Global carbon emissions currently exceed 56 gigatonnes, with iClima forecasting that the total needs to be reduced at a rate of 7.6 percent per year by the end of the year to reach the target of limiting global warming to 1.5 degrees Celsius.
As a consequence, iClima Earth believes that large investment into new technologies and companies is required to substantially reduce and avoid carbon emissions.
CLMA looks to provide investment opportunities 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
Gabriela Herculano, chief executive officer of iClima Earth acknowledged the scepticism towards environmentally focused funds, but argued that the company provided a distinctive approach to sustainable strategies.
She explained: “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.”
Commenting on the fund, she added: “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.
Nik Bienkowski, co-chief executive officer of HANetf believed the strategy would satisfy investors interested in climate change solutions.
He 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 ETF leans in to the theme we talk about every day – limiting climate change. CLMA is unique as it allows investors to make a real impact investment via an ETF. Some climate related ETFs have experienced exponential growth in the past 20 months and we expect this strong investor interest to continue.”