HSBC Asset Management has extended its suite of Paris-aligned ETFs with the launch of a Japanese equity fund.
The HSBC MSCI Japan Climate Paris Aligned UCITS ETF (HPJP LN) has been listed on London Stock Exchange in US dollars and comes with an expense ratio of 0.18%.
The fund is linked to the MSCI Japan Climate Paris Aligned Index which provides exposure to Japanese large and mid-cap equities while weighting constituents in order to align with the Paris Agreement’s goal of limiting global warming to 1.5°C above pre-industrial levels.
The methodology first removes companies from the parent MSCI Japan Index which are involved in controversial weapons, tobacco, and thermal coal, as well as firms deriving significant revenue from oil and gas-related activities.
The remaining securities are then reweighted based on the risks and opportunities associated with the climate transition. MSCI harnesses a diverse array of data and analytics to feed into the construction process including scope 1, 2, and 3 carbon emissions, green revenues, and the index provider’s own proprietary low carbon transition score and climate value-at-risk measures.
The index offers an immediate 50% reduction in weighted-average carbon intensity relative to its starting universe as well as a further 10% annual decarbonization going forward.
It also aims to deliver on a range of secondary objectives such as maximizing exposure to sustainable energy providers, increasing the weight of companies with clear carbon reduction targets, minimizing fossil fuel exposure, and reducing climate value-at-risk by 50%.
Due to the ETF’s environmental objectives, the fund qualifies as an Article 9 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).
HSBC now offers four Paris-aligned equity ETFs with the other three funds providing exposure to global developed, US, and European equity markets.