Nuveen launches active ETF designed to provide exposure to the transition to net zero carbon

Nuveen has announced the launch of the Nuveen Global Net Zero Transition ETF (NASDAQ: NTZG) which will express conviction in the ongoing transition of the global economy to “net zero” carbon emissions.

 

The firm writes that in seeking to align with the goals of the Paris Climate Agreement on avoiding dangerous climate change, the underlying holdings of the fund are comprised of stocks in the following three categories:

 

Climate leaders: Companies that have committed to carbon-reduction plans validated as Paris-aligned, as well as companies with a credible intention to reducing carbon

Companies providing disruptive technology that significantly supports climate mitigation

High-carbon emitters where reduction will represent a meaningful contribution to real-world emissions decline

 

The portfolio managers are Tom Lavia, CFA – Member of Nuveen's Equities Investment Council; Willis Tsai – Head of International Portfolio Management for Nuveen’s equities team and Greg Mancini – Co-Head of Global Research for Nuveen’s equities team.

 

The ETF is an actively managed global equity ETF seeking to outperform the MSCI All Country World Index (ACWI) with a focus on carbon emissions reductions.

 

“Today, a confluence of scientific conviction, societal consensus, energy security policy, and business practice is all centred on the reality that reducing harmful carbon emissions is absolutely critical to the future of the planet. These forces represent a powerful tailwind for our strategy as more investors prudently realize the urgently needed transition to net zero will inevitably create market winners and losers,” says Jordan Farris, Head of ETF product, Nuveen.

 

“Through our engagement process, we will seek to decarbonize the portfolio at a rate faster than that of the market to achieve net zero carbon ahead of the Paris Agreement 2050 deadline. Importantly, the fund serves as an effective voice for investors who are concerned about climate issues and want to drive change through their investments,” he says.

 

The firm writes that net zero originated as a concept for country-level climate commitments but is now becoming a benchmark for companies that want to signal their intention to rapidly decarbonize their businesses.

 

Nuveen’s net zero stewardship approach focuses on the portfolio’s highest carbon emitters to move companies closer to meaningful reductions in their emissions. Key elements of the approach include communicating and regularly meeting with companies to establish expectations regarding climate strategy, recommending enhancements to strategies and monitoring progress against goals, and taking other action where necessary, such as voting on climate related shareholder proposals to compel additional progress on carbon reduction.

 

“Our research shows that nine out of 10 investors want to see the results of their ESG investing. Accordingly, in this strategy, we’ll practice transparent stewardship, including publishing data demonstrating the reduction of emissions, pointing specifically to the companies that are driving progress and continuing to signal our own accountability,” says Amy O’Brien, Global Head of Responsible Investing, Nuveen.

 

Investors view the transition to net zero carbon as a critical investment criterion, as shown in Nuveen’s market research. According to Nuveen’s Responsible Investing Survey, one in two investors (58 per cent) would be interested in an investment strategy if it had only investments with net zero carbon emissions. A strong majority of ESG investors (85 per cent) agree that knowing the total carbon emissions generated by their investments would help them make portfolio allocation decisions.

 

 

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