HSBC MSCI Japan Climate Paris Aligned UCITS ETF

Issuer: HSBC

Asset Class: Equity

TER: 18bps

Trading Currency: USD

Pays Income: False

Listing Date: 11 Nov 2021

Ticker: HPJP

ISIN: IE000UU299V4

This fund offers investors a targeted approach to the Japanese equity market, with a strong emphasis on aligning with global climate objectives. It is designed to track a benchmark of large and mid-capitalisation Japanese companies that are consistent with the long-term warming targets of the Paris Agreement. The core of the strategy is to select and weight companies to be compatible with a 1.5°C warming scenario, leading to a portfolio with significantly lower carbon intensity compared to the broader Japanese market. This makes it a compelling option for those looking to decarbonize their equity holdings while maintaining exposure to Japan's dynamic economy.

The underlying index employs a multi-faceted methodology to achieve its climate goals. It begins by excluding companies involved in controversial businesses, including weapons, tobacco, and thermal coal, as well as those violating principles of the UN Global Compact. Following these exclusions, the remaining securities are re-weighted to favour companies that are leaders in the transition to a low-carbon economy. This includes overweighting firms that generate green revenues or have ambitious and credible decarbonization targets. Conversely, companies with high carbon emissions or significant fossil fuel reserves are underweighted, ensuring the portfolio is robustly positioned to mitigate climate transition risks and capture opportunities in sustainable innovation.

By integrating these rigorous climate-focused criteria, the investment provides a core solution for a Japanese equity allocation within an ESG-conscious portfolio. It is particularly suitable for investors seeking to make a tangible environmental impact without foregoing the potential for capital appreciation from one of the world's most advanced economies. The fund provides a transparent and efficient vehicle to invest in Japanese corporations that are not only financially sound but are also leading the way towards a more sustainable and climate-resilient future.