iShares S&P 500 Paris-Aligned Climate UCITS ETF (Dist)

Issuer: iShares

Asset Class: Equity

TER: 10bps

Trading Currency: USD

Pays Income: False

Listing Date: 29 Apr 2022

Ticker: UPAD

ISIN: IE000G4PH2B1

This fund offers core exposure to the US large-cap equity market, specifically the S&P 500, but with a significant climate-focused overlay. It is designed for investors who want to maintain broad market participation while aligning their portfolio with the goals of the Paris Agreement. The strategy involves tracking a specific index that systematically reweights and excludes companies to reduce carbon emissions and mitigate climate-related risks, providing a sustainable alternative to traditional market-cap-weighted investments in US stocks.

The underlying index applies stringent criteria based on the EU Paris-Aligned Benchmark (PAB) regulations. This means it aims for a significant reduction in its overall greenhouse gas (GHG) intensity compared to the standard S&P 500. It achieves this by excluding companies with significant involvement in fossil fuels, controversial weapons, and tobacco, as well as those violating social norms. Furthermore, the index is constructed to achieve a year-on-year self-decarbonization of at least 7%, ensuring the portfolio becomes progressively greener over time. This approach not only addresses transition risks but also seeks to capture opportunities in companies leading the low-carbon transition.

This instrument can serve as a core holding for environmentally conscious investors, potentially replacing a traditional S&P 500 allocation. By integrating forward-looking climate metrics, it aims to provide a more resilient portfolio in the face of increasing climate regulation and physical risks. It offers a solution for those looking to decarbonize their investments without sacrificing exposure to one of the world's most important equity markets, thereby combining potential long-term growth with a tangible positive environmental impact.