iClima goes to the US
London ESG consultancy iClima is making its entrance into the US ETF market, with two environmental ETFs.
CLMA is currently available in London via the Hector and Nik white labelling platform (“HAN ETF”). It invests in global cleantech companies that promote decarbonisation. Decarbonisation is measured counterfactually: by estimating how much greenhouse gases certain companies help the world avoid.
CLMA targets five sustainability sectors: renewable energy utilities, electric car makers, water and sewage treatment companies, “decarbonization enabling solutions”, and sustainable products. 100 companies are selected based on their decarbonisation scores and market capitalisation. Weights are capped at 2%.
SHFT invests in companies aimed at ending the fossil fuel dependent energy grid.
SHFT buys companies that help make: solar panels, electric vehicle charging stations, batteries, clean energy software, and some others. It is built on a vision of the future where households are energy self-sufficient thanks to rooftop solar panels and batteries.
SHFT will hold a concentrated 50 stock portfolio and uses equal weighting. It is intended as a satellite.
The funds charge 0.65%.
Analysis
Most fossil fuels worldwide are burnt to power country’s electrical grids. Electricity is generated at powerplants and pumped through the grid for households and businesses to use as they need.
Moving to renewable energy requires rich countries – the United States especially – to ditch this model. And a substitute often discussed is this decentralised energy distribution model, where households have their own solar panels and batteries and operate off the grid, essentially.
The model is perfectly workable. The problem is getting enough government subsidy to make it affordable for the middle and working classes. There is no such thing as a free market in energy; its heavily government subsidised at every link in the chain.
SHFT aims to bring capital to the companies that help make this local energy model a reality. .