Press Release


State Street Global Advisors Launches S&P®/ASX 200 ESG ETF


SYDNEY, 27 July 2020 State Street Global Advisors, the asset management arm of State Street Corporation (NYSE: STT), is expected to list a new environmental, social and governance (ESG) ETF on the Australian Stock Exchange (ASX) on Wednesday 5 August 2020.
 
Management costs for the ETF are 0.13 per cent per year, meaning it will be one of the lowest cost ESG ETFs available to investors in Australia.1
 
The SPDR S&P/ASX 200 ESG Fund (Ticker: E200) is the first ETF to track the S&P/ASX 200 ESG Index, a broad-based, market-cap-weighted index designed to measure the performance ofsecurities meeting sustainability criteria, while maintaining similar overall industry group weights as the S&P/ASX 200 Index.

This means for the first time, investors will be able to access improved ESG exposure with a similar risk-return profile to the Australian equity market benchmark, the S&P/ASX 200 Index.
 
E200 benefits from exclusionary screening and best in class rankings to improve ESG characteristics. It screens out companies involved in the tobacco and controversial weapons industries, and companies with low ESG scores. Top ranking ESG companies relative to industry peers are also included.
 
Globally, ESG ETFs have spiked in popularity in the last two years and are expected to grow to more than $1.9 trillion in the next decade.2
 
Head of SPDR ETF Asia Pacific Distribution Meaghan Victor said ESG investing is no longer a niche reserved for a select few.
 
“Today, high profile issues such as climate change, diversity, executive remuneration and corporate culture mean more investors are looking to align their investment strategies with their values,” Ms Victor said. 
 
“For the first time, investors will be able to access an ESG fund with a similar risk-return profile to the Australian equity market benchmark, the S&P/ASX 200 Index. E200 provides a sustainable alternative to the SPDR S&P/ASX 200 Fund (Ticker: STW), which is a staple investment for many institutions, advisers, and retail investors,” she said.
 
ESG investing is the assessment of material environmental, social and governance issues during the investment process to complement traditional research, like analysing financial statements, industry trends, and company growth strategies.
 
The ESG characteristics of the new ETF are incorporated into the index it tracks through exclusions and rankings.

The S&P/ASX 200 ESG Index excludes companies involved in tobacco and controversial weapons, companies with low UNGC Scores3, and the lowest 25 per cent of companies within industry groups, ranked by S&P DJI ESG Scores4.
 
The securities are market cap weighted so they represent 75 per cent of the market capitalisation of each industry group in the S&P/ASX 200 Index. This is what will give the fund a similar risk-return profile to the S&P/ASX 200 Index.
 
“Australian investors are drawn to ETFs for their transparency and ability to offer diversification through a basket of securities in one single trade. They have proven to be a highly popular way to access core asset allocations for Australians – totaling more than $65.6 billion as at 30 June 20205,” Ms Victor said.
 
“But ETFs are more than inflows. Their low-cost and simple characteristics have also meant they have democratised investing, giving investors access and choice to equities that decades ago would have only been accessible to a select few. Now that choice includes ESG,” she said.
 
A new global report on consumer sentiment, purpose and sentiment in wealth management: State Street Global Advisors Individual Investors 2019 Study6 found that the majority of investors now say ESG influences their investment decisions. More than 60 per cent of investors in the US, Australia and the UK agree that a company’s social, political or environmental impact always or sometimes influences their decisions to invest.
 
The research shows that in Australia, 64 per cent of investors want financial advisers to offer them advice on how they can invest through ESG.
 
“ESG investing can have an impact on a company’s long-term performance, allows clients to invest based on their values, and has a demonstrated link to sustainable long-term value creation.
 
“And now, it doesn’t need to come at a premium. E200 will spark a new wave of investing for institutions, intermediaries, platforms, financial advisers and retail investors alike,” Ms Victor said.
 
About E200:

  • The SPDR S&P/ASX 200 ESG Fund (Ticker: E200) is expected to list on the ASX on Wednesday 5 August 2020. Its PDS is available here: https://www.ssga.com/au/en_gb/individual/etfs/announcements.
  • It is the first ETF to track the S&P/ASX 200 ESG Index, a broad-based, market-cap-weighted index that is designed to measure the performance of securities meeting sustainability criteria, while maintaining similar overall industry group weights as the S&P/ASX 200 Index.
  • It incorporates exclusionary screening criteria which remove companies involved in tobacco and controversial weapons, as well as companies with low UNGC Scores.
  • It incorporates best in class screening to include companies whose S&P DJI ESG Scores are in the top 75 per cent of their industry group.
  • The S&P DJI ESG Scores are based on more than 20 years of research and analysis; it factors in financially material ESG dimensions that impact companies’ values.
  • The Fund will provide quarterly distributions.
  • The Index is rebalanced annually.
  • Modifications to the Index will take place in September 2020, providing an exclusion of companies generating more than 5 per cent revenue from thermal coal.