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World's first CO2 avoidance ETF launches in London, Frankfurt and Milan

The ETF is the first to provide exposure to companies offering products and services that “enable CO2e avoidance, and quantifies the impact of those companies in meeting decarbonisation targets”

industrial pollution

The iClima Global Decarbonisation Enablers UCITS ETF (LON:CLMA), which claims to be the world’s first exchange-traded fund (ETF) to focus specifically on companies that enable CO2 avoidance, has launched on the London Stock Exchange and will soon list in Germany and Italy too.

The fund began trading in London on Tuesday, December 8, with both US dollar and sterling versions, under tickers CLMA and CLMP respectively.

It will also list on Deutsche Boerse’s Xetra and Borsa Italiana by the end of the week.

The ETF has a total expense ratio of 0.65% and tracks the iClima Global Decarbonisation Enablers Index, which currently contains 151 companies, including more obvious names like fuel cells companies such as Ceres Power and Plug Power, renewable energy equipment from the large Vestas Wind Systems and ITM Power, electric car makers Tesla and NIO, but also ride sharing companies Uber Technologies and Lyft, sustainable packing and forestry via DS Smith and Mondi, Johnson Matthey for its pollution control, London Stock Exchange Group for offering ‘green finance’, Halma and Smart Metering Systems PLC for measurement, food angles via Beyond Meat, HelloFresh and Kerry Group, sustainable building via the likes of Kingspan Group and Ferguson.

The index has been developed by iClima Earth, which launched the ETF on the HANetf platform, for which it is the first ESG-focused fund.

WATCH: Gabriela Herculano talks about launching the world’s first carbon avoidance solutions ETF

Gabriela Herculano, CEO of iClima Earth, said the ETF would “redefine climate change investments”.

“This is the world’s first UCITS climate change ETF that provides exposure to companies offering products and services that enable CO2e avoidance, and quantifies the impact of those companies in meeting decarbonisation targets.”

Herculano said iClima estimates that the 151 companies in the index can potentially help the world avoid more than 0.6 gigatonnes of C02e in 2021, though the planet needs to avoid 4.26 gigatonnes of new emissions next year to reach the Paris Agreement’s goal of limiting global warming to 1.5°C above pre-industrial levels.

“There are many ‘green’ investment products already on the market that use complex ESG scores or focus on low-carbon companies doing less harm,” she said.

“However, the best way to reduce CO2e in the atmosphere is to find lower-emission alternatives to products and services, thereby ‘avoiding’ emission. In order for the world to reach net-zero by 2050 and have a chance of limiting global warming to 1.5°C above pre-industrial levels, large amounts of investment are necessary into new technologies and companies that will reduce and avoid carbon emissions.

“As a result, CLMA provides exposure to these companies across five subsectors including green energy, green transportation, water and waste improvements, decarbonisation enabling solutions and sustainable products. This includes high growth solutions like green hydrogen and fuel cells, distributed generation and electric vehicles.”

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