L&G Emerging Markets ESG Exclusions Paris Aligned UCITS ETF (Acc)

Issuer: L&G ETFs

Asset Class: Equity

TER: 25bps

Trading Currency: GBX

Pays Income: False

Listing Date: 01 Nov 2023

Ticker: RIEE

ISIN: IE000CBYU7J5

This fund offers investors exposure to a broad basket of large and mid-capitalisation stocks from emerging market countries, while integrating stringent environmental, social, and governance (ESG) criteria. The investment strategy is designed to align with the objectives of the Paris Agreement by tracking an index that specifically targets a significant reduction in carbon emissions. It provides a way to participate in the growth potential of developing economies through a portfolio that prioritizes companies demonstrating strong sustainability characteristics and a commitment to decarbonization.

The methodology involves a multi-layered screening process. Initially, it excludes companies involved in controversial activities such as thermal coal, oil and gas, tobacco, and controversial weapons. Following these exclusions, the remaining constituents are re-weighted to favour companies with higher ESG scores and lower carbon footprints. The underlying index is constructed to meet the requirements of the EU's Paris-Aligned Benchmark (PAB) regulation, which mandates a substantial initial reduction in greenhouse gas intensity versus a parent universe and a continuous annual self-decarbonization pathway. This results in a portfolio tilted towards more sustainable businesses that are better positioned for the transition to a low-carbon economy.

This investment is suitable for those seeking to build a core emerging markets allocation within their portfolio with a strong emphasis on responsible investing and climate action. The fund's focus on ESG leaders and climate-aligned companies may appeal to investors looking to mitigate long-term sustainability risks while capturing the dynamic growth opportunities present in emerging markets. As an accumulating share class, any dividends generated by the underlying holdings are reinvested, promoting the potential for capital growth through compounding over the long term.