ETFS Battery ETF recharges with ESG filters
The benchmark underpinning ETF Securities’ ETFS Battery Tech & Lithium ETF has been recharged, with the addition of exclusion criteria to filter out companies that do not meet environmental, social and governance (ESG) standards.
The benchmark’s liquidity and concentration rules have also been amended.
The new ESG standards align ACDC with the policy approach of the Albanese government, which has made the growth of the electric vehicle market a key part of its emissions reduction and renewable energy plan.
The new government has committed to bring down the cost of electric vehicles by exempting many of them from import tariffs and fringe benefits tax.
It has also promised to work with stakeholders to establish a National Electric Vehicle Strategy, which will develop other measures to increase electric car sales and infrastructure and encourage local manufacturing of electric vehicle components.
ACDC tracks the Solactive Battery Value-Chain Index, which holds a portfolio of listed companies that provide electro mechanical storage technology and miners that produce metals used for manufacturing lithium batteries.
The Fund offers investors exposure to opportunities in the battery technology supply chain, which is key to the growing electric vehicle and renewable energy markets. Top holdings include Western Australian lithium
miners Mineral Resources and Pilbara Minerals, Dutch specialty metals producer AMG Advanced Metallurgical, and manufacturers Renault SA and Hyundai Electric & Energy System Co.
Solactive has amended its selection methodology to include a range of ESG activity screens. Companies will be screened for human rights, corruption and labour rights violations, involvement in weapons production, coal extraction and oil and gas production.
In framing its screens, Solactive has been guided by widely supported ESG conventions, such as the United Nations Global Compact, which sets sustainable business principles covering labour, human rights, the environment and anti-corruption.
ETF Securities Head of Distribution, Kanish Chugh, says, “This important change to the fund’s selection methodology follows years of feedback from clients. It is a recognition that investors keen on battery technology are usually environmentally minded.”
A further refinement of the selection methodology will set liquidity and concentration limits on holdings.
ACDC’s portfolio is worth around A$500 million. Since it was launched in August 2018, it has returned an average of 18.3 per cent a year, which is close to double the return of the MSCI World Index over the same period.