Examining the Exclusions: SPDR S&P 500 ESG Leaders UCITS ETF
When returning to equities after the significant market falls this year, many ETF investors have continued to choose an ESG fund for core US equity exposure. SPDR S&P 500 ESG Leaders UCITS ETF has a methodology that combines exclusions and ranking by ESG ratings, which maintains broad allocation and similar industry group weights to the S&P 500, the most popular investor benchmark.
Here we answer some of the most common questions from clients on exclusions.
The S&P ESG Leaders methodology starts with exclusions before all eligible stocks from the S&P 500 universe are considered on relative ESG ratings versus peers.
Stocks are deemed ineligible for inclusion in the index, and thus the SPDR ETF, based on three areas:
Negative screening on business activity
Low ESG score
The best-in-class ESG scoring involves ranking all eligible securities in descending order of their S&P DJI ESG score. This is an aggregation of environmental, social and governance scores that measure ESG risk and performance factors with a focus on financial materiality. Stocks that are thereafter selected for index inclusion constitute the top 50% by float-adjusted market cap within each industry group, with any ranking lower also excluded.
Selected exclusions by category
1.Why is Exxon, the largest quoted fossil fuels company, not excluded?
Exxon* entered the S&P 500 ESG Leaders index at the annual rebalancing at the start of May 2022. In terms of business activity, Exxon* is a fossil fuel producer, but does not have operations in oil sands, shale or Artic oil and gas exploration that exceed the 5% revenue threshold.
As for the stock’s S&P DJI ESG score ranking, it was above the 75% threshold in its global GICS industry group (Oil & Gas Upstream & Integrated), which includes S&P Global LargeMidCap and S&P Global 1200 constituents. Even though the score was reduced given low levels of data disclosure, Exxon* did achieve well above the industry average on certain social measures, including community relations.
Thus Exxon* was deemed eligible for index inclusion on both counts. It replaced Chevron*, an oil and gas competitor, which presented a lower S&P DJI ESG score, below the 75% threshold. Of note, Exxon* is excluded from the competing MSCI USA ESG indices.
2.Why is Tesla, the leading producer of electric vehicles, excluded?
Tesla* was dropped from the index at the start of May 2022. Even though the company is well known for clean energy solutions, it was ineligible for index inclusion because of its low S&P DJI ESG ranking within its global GICS industry group (Automobiles & Components). While Tesla’s* score had remained fairly stable year on year, the average for the industry group increased.
According to S&P Dow Jones Indices, Tesla’s* relatively low score was not helped by the lack of a low carbon strategy and codes of business conduct. Furthermore, S&P’s Media & Stakeholder Analysis, a process that seeks to identify current and potential future exposure to risks, flagged Tesla’s* handling of the official investigation into deaths and injuries linked to its autopilot vehicles as well as claims of racial discrimination and poor working conditions at its Fremont factory.
This example shows the impact of a wide ESG lens that includes social and governance issues.
3.Given the nearly 300 stock exclusions, how is tracking error kept so low?
While the S&P 500 ESG Leaders Index is highly selective, it is designed to reflect the overall characteristics and industry group representation of its parent S&P 500 index. It retains representation across all 11 GICS sectors.
Sector underweights are relatively small compared with competing ESG strategies. This has been particularly important for the energy sector and has helped keep performance close to the parent index in the past year, even amid the heightened volatility.
To learn more about the SPDR S&P 500 ESG Leaders UCITS ETF, and to view its performance history, please visit its fund page.
* Inclusion or exclusion of this stock should not be taken as a recommendation to buy or sell.
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IL EST POSSIBLE QUE LES SPDR ETF DE SSGA NE VOUS SOIENT PAS DISPONIBLES OU NE VOUS CONVIENNENT PAS. LES OPINIONS/INFORMATIONS PRÉSENTÉES SUR CE SITE NE SAURAIENT CONSTITUER UN CONSEIL EN INVESTISSEMENT OU UN CONSEIL D’ORDRE FINANCIER, JURIDIQUE, RÉGLEMENTAIRE, COMPTABLE OU FISCAL. EN CAS DE DOUTE, DEMANDEZ L'AVIS D'UN CONSEILLER INDÉPENDANT. LES INFORMATIONS ET OPINIONS PRÉSENTÉES SUR CE SITE NE SAURAIENT CONSTITUER UNE SOLLICITATION OU UNE OFFRE D’ACHAT OU DE VENTE DE PARTS DES FONDS OU DE TOUT AUTRE INSTRUMENT FINANCIER.
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Informations relatives au Mexique
Les informations figurant dans ce document ne constituent en aucun cas une offre de titres financiers et ne sauraient être considérées comme telles. Les Fonds mentionnés dans ce document ne sont et ne seront pas agréés en vertu de la Mexican Securities Market Law (Ley del Mercado de Valores). Ils ne peuvent faire l’objet d’aucune offre publique, pas plus qu’ils ne peuvent être vendus sur le territoire des États-Unis d’Amérique. Il est interdit de distribuer publiquement les documents informatifs liés aux fonds susmentionnés sur le territoire du Mexique, tout comme il est interdit d’y échanger des parts des Fonds.
OPCVM SPDR ETFs
SPDR ETFs Europe I Plc et SSGA SPDR ETFs Europe II Plc émettent les ETF SPDR et sont une société d’investissement à capital variable et à compartiments assortis d’une responsabilité séparée. La Société est structurée comme un Organisme de placement collectif en valeurs mobilières (OPCVM) conformément à la législation irlandaise et agréée en qualité d’OPCVM par la Banque centrale d’Irlande.
Ce site web s'adresse uniquement aux investisseurs qualifiés, tels que définis par l'article 10 (3) et (3ter), de la loi suisse sur les placements collectifs de capitaux (« LPCC ») et son ordonnance d'application. Certains fonds peuvent ne pas être enregistrés pour la distribution publique auprès de l'Autorité fédérale de surveillance des marchés financiers (FINMA), qui agit en tant qu'autorité de surveillance en matière de fonds de placement, ou peuvent ne pas avoir désigné de représentant et d'agent payeur suisse. Pour les fonds qui ont désigné un représentant et un agent payeur, les investisseurs intéressés peuvent obtenir les prospectus, les statuts, les DICI ainsi que les derniers rapports annuels ou semestriels disponibles gratuitement auprès du représentant et agent payeur suisse, State Street Bank International GmbH, Munich, succursale de Zurich, Beethovenstrasse 19, 8027 Zurich, ou sur le site https://www.ssga.com, ainsi qu’auprès du distributeur principal en Suisse, State Street Global Advisors AG (« SSGA AG »), Beethovenstrasse 19, 8027 Zurich. Pour les fonds qui n'ont pas désigné de représentant ni d'agent payeur en Suisse, veuillez noter que les fonds sont ouverts aux investisseurs qualifiés, à l'exclusion des investisseurs qualifiés bénéficiant d'une clause d'exclusion (« opting-out ») conformément à l'art. 5(1) de la loi fédérale suisse sur les services financiers (« FinSA ») et sans aucune relation de gestion de portefeuille ou de conseil avec un intermédiaire financier conformément à l'article 10(3ter) de la LPCC (« Investisseurs Qualifiés Exclus »). Pour obtenir plus d'informations et les documents relatifs au fonds, veuillez contacter SSGA AG.
Vous devez vous procurer et lire le prospectus et le document d'information clé pour l'investisseur (DICI) de SPDR avant d’investir. Ils sont disponibles en cliquant ici. Ceux-ci comprennent des informations complémentaires concernant les fonds SPDR, y compris des informations relatives aux coûts, aux risques et où les fonds sont autorisés à la vente.
ETFs SPDR américains
La distribution des intérêts des ETF SPDR américains en Suisse sera exclusivement faite à des investisseurs qualifiés et s'adressera uniquement à ceux-ci, tels que définis par l'article 10(3) et (3ter), de la loi suisse sur les placements collectifs de capitaux (« LPCC ») et son ordonnance d'application. Par conséquent, les ETF SPDR américains ne sont pas enregistrés pour une distribution publique auprès de l'Autorité fédérale de surveillance des marchés financiers (« FINMA »). Certains fonds peuvent ne pas avoir désigné de représentant et d'agent payeur suisse. Pour les fonds avec un représentant et un agent payeur suisse, les investisseurs intéressés peuvent obtenir les documents juridiques liés aux ETFs SPDR américains gratuitement auprès du représentant et agent payeur suisse, State Street Bank International GmbH, Munich, succursale de Zurich, Beethovenstrasse 19, 8027 Zurich, ou sur le site https://www.ssga.com, ainsi qu’auprès du distributeur principal en Suisse, State Street Global Advisors AG (« SSGA AG »), Beethovenstrasse 19, 8027 Zurich. Pour les fonds sans représentant ni agent payeur suisse, veuillez noter que les fonds sont ouverts aux investisseurs qualifiés, à l'exclusion des investisseurs qualifiés ayant une clause d’exclusion (« opting-out ») conformément à l'art. 5(1) de la loi fédérale suisse sur les services financiers (« FinSA ») et sans relation de gestion de portefeuille ou de conseil avec un intermédiaire financier conformément à l'article 10 (3ter) de la LPCC (« Investisseurs Qualifiés Exclus »). Pour obtenir plus d'informations et les documents relatifs au fonds, veuillez contacter SSGA AG.
Avant d’investir, il convient d’analyser les objectifs d’investissement, les risques, les frais et les dépenses des fonds. Pour obtenir un prospectus contenant ces informations et d'autres, téléchargez le ici ou adressez-vous à votre conseiller financier. Lisez-le attentivement avant d'investir.