Reducing your carbon footprint with the Low Carbon 100 Europe THEAM Easy UCITS ETF tracker

With just a few months to go until the United Nations Climate Change Conference (COP21) due in December in Paris, institutional investor awareness is taking the form of increasingly numerous commitments to help mitigate climate change.

On 22 May, more than 1 000 financial industry professionals met up as part of “Climate Finance Day” to accelerate their efforts to combat climate change. To maintain the rise in global average temperatures below the threshold of 2°C between now and the end of the century, investors are working to transform separate initiatives into market practices that are adopted as broadly as possible. These include shareholder commitment to limiting climate change, divestment from fossil fuel-related companies and industries and the decarbonisation of portfolios, which aims to reduce the exposure of investors’ portfolios to companies whose activities generate greenhouse gas (GHG) emissions. This has resulted in the creation of the Portfolio Decarbonisation Coalition [1], a community of responsible institutional investors who undertake to decarbonise their portfolios. The aim of this coalition is twofold: measuring and publishing the carbon footprint of at least USD 500 billion of assets under management and reducing it by USD 100 billion between now and the COP 21 this December. In practice, this translates into the reallocation of portfolios by underweighting companies that are the biggest emitters of CO2 and overweighting, for example, companies pursuing environmentally sustainable policies and activities.

This approach, which is becoming widespread among institutional investors, may seem difficult to implement for smaller professional investors and individuals not having access to data related to the GHG emissions of the companies in their portfolio.

THEAM, which has been working for several years alongside BNP Paribas Investment Partners in the development of responsible investment solutions, offers a listed index fund or ETF (Exchange Traded Fund) unique in Europe, that enables any type of investor –institutional or individual – to combine responsible investing with diversified exposure to European equities.

Low Carbon 100 Europe THEAM Easy UCITS ETF, the first Low Carbon thematic fund

The Low Carbon 100 Europe THEAM Easy UCITS ETF tracker, created in 2008, provides immediate access to major European companies at the cutting edge of their sector in terms of reducing CO2 emissions. Managed based on a physical replication, the ETF is designed to replicate as closely as possible the performance of the Low Carbon 100 Europe® index by investing in the 100 stocks making up the index.

Methodology of the Low Carbon 100 Europe® index

An independent scientific committee, consisting of academics, NGOs and environment specialists, presided over the drawing up of the index and monitors its development. The index is calculated and published by Euronext.

The starting universe consists of the 300 largest European companies in terms of market capitalisation. The methodology then retains the companies with the smallest carbon footprints, while at the same time respecting the sector weightings of the reference universe.

Carbon footprints are calculated taking into account emissions related to companies’ activities and their energy and raw material supplies in relation to their revenue (tonnes of CO2/revenue ratio).

For the “oil and gas” and “automobile” sectors, the analysis has been carried out in more detail to also take account of CO2 emissions related to the use of the products. Direct and indirect CO2 emissions are collected by Trucost [2] and by Cheuvreux for the oil, gas and automobile sectors.

Performance of the Low Carbon 100 Europe index

The gain in terms of the reduction in the carbon footprint offered by the strategy has historically helped improve the financial performance. Compared with the STOXX Europe 600 index, the performance achieved by the Low Carbon 100 Europe® index is 14% higher net of fees over five years [3].

As for investors concerned about the difference in performance compared to traditional market indices, the use of sector diversification criteria helps maintain a sector representativeness as close as possible to such indices.

The correlation between the Low Carbon 100 Europe® index and the STOXX Europe 600 and MSCI Europe indices amounts to more than 98% over five years [4].

Why invest in the Low Carbon 100 Europe THEAM Easy UCITS ETF tracker?

Simplicity and flexibility: Listed in continuous trading on the Paris Stock Exchange, the Low Carbon 100 Europe THEAM Easy UCITS ETF tracker can be traded like a share from 9am to 5.35pm. So in one transaction, investors sensitive to environmental issues or convinced of the growth potential of low carbon equities can gain exposure to the European equity market while at the same time limiting the carbon footprint of their investment.

Solid performance: the Low Carbon 100 Europe THEAM Easy UCITS ETF tracker has outperformed the STOXX Europe 600 index over five years [5]. The fund has a 5-star rating from Morningstar [6].

Low management fees: Using a simple and transparent investment process, the tracker is offered with management fees of 0.60% per year.

Fund fact sheet

Fund name: Low Carbon 100 Europe THEAM Easy UCITS ETF
Benchmark index: Low Carbon 100 Europe (NTR)
ISIN code (EUR - Capitalisation): FR0010655597
Legal form: French mutual fund (FCP), compliant with European directive 2009/65/EC, eligible for the personal equity plan (PEA)
Creation date: 23/10/2008
Replication method: physical
Management company: THEAM
Manager: Emilie POTEVIN
On-going charges: 0.60%
Maximum Subscription/redemption fees – Primary Market (authorised participants): 7%
Maximum Subscription/redemption fees – Secondary Market (all investors): 0%
SRRI: 6. The synthetic risk and reward indicator is calculated on a scale of 1 to 7 (7 corresponding to the highest risk). It is calculated periodically and is therefore likely to change over time. We advise you to regularly read the KIID. The higher the risk, the longer the recommended investment horizon.
Recommended minimum investment period: Five years
Recommended investors: All subscribers
Eligible for the equity savings plan: YES