HANetf launches carbon offset active ETF
American mutual fund provider Saturna Capital is partnering with London white labeller HANetf to list active ETF version of its mutual fund. The Saturna Sustainable ESG Equity HANzero UCITS ETF (SESG) will hold a concentrated portfolio of 50-odd global stocks, mostly household name large caps. Looking at the portfolio displayed on Saturna’s website, the fund seems to mostly have a quality factor investment style—with most holdings having higher ROE and lower debt than their sector averages. The fund is also near-equally weighted.
The fund uses negative and positive ESG screens. The negative screen excludes tobacco, porn, weapons companies etc (the familiar bad guys). The positive screen gives easier fund inclusion to companies with better environmental, labour and social records.
It buys carbon credits from South Pole to theoretically offset the carbon emissions of portfolio companies. HANetf has come up with a sub-brand - HANzero™, they even put a trademark on it - under which this fund will be run.
The fund has performed dead in line with its benchmark (S&P 1200) the past 5 years and charges 0.70%.
Analysis – are carbon offsets just a license to pollute?
The thing I find most interesting about this launch is the carbon credits. The thinking behind them is that you can create a market for emissions reductions, which allow people who build environmentally friendly projects – like big forests or big renewable energy stations – to get paid. It is a nice idea, although carbon credits have also been criticised as giving big polluters a license to continue polluting. (The academic consensus is that “net zero” is a propaganda concept.)
For investors, one suspects the carbon credits will not affect the performance much. They are only a tiny part of the fund’s NAV from what I can tell. Still, it will be interesting to see if investors bite. I suspect more ETFs will come out globally in the future that pursue this type of carbon offset strategy. It is the zeitgeist.
