LGIM and AP1 jointly launch ESG fossil fuel EM equity fund
The new ESG fossil-fuel free Emerging Market equity index fund is targeted at institutional and wholesale investors in Europe. LGIM, a provider of passive investment solutions with index assets of €436bn, has developed a new range of index funds that will integrate ESG while leveraging the British asset manager’s active ownership capability and engagement policies with the index companies through voting.
The capital for the fund, an Irish ICAV meeting European Ucits standards, will be allocated based on how well companies score on ESG criteria, with good scores carrying higher weighting compared to their market capitalisation. Poor scores will be weighted down. The ESG scoring exercise will be transparent, enabling companies to be informed on what they need to do to improve.
Tracking the Solactive L&G Emerging Markets Future Core Index, the index consists of large and mid-cap companies across 26 emerging markets. In addition to energy and tobacco sector, exclusion criteria in product involvement relating to nuclear power generation, assault and controversial weapons, coal and thermal coal, tobacco production and retailing, oil sand extraction, recreational cannabis, gambling and repeated violation of the UN Global Compact (UNGC) principles.