Global investment manager Franklin Templeton announced the launch of the Franklin S&P 500 Screened UCITS ETF and the Franklin S&P World Screened UCITS ETF, two new exchange traded funds targeted at European investors, aimed at providing enhanced ESG and reduced carbon footprint features while closely tracking the performance of their U.S. and global equity benchmarks.

The new ETFs are classified as Article 8 under the EU’s SFDR regulation, and are registered for distribution in Austria, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Spain, Sweden and the UK. Both new funds will be managed by Dina Ting, Head of Global Index Portfolio Management, and Lorenzo Crosato, ETF Portfolio Manager at Franklin Templeton.

Caroline Baron, Head of ETF Distribution, EMEA, Franklin Templeton, said:

“These new ETFs offer a cost-efficient and transparent way to access core equity exposures with enhanced ESG profiles and reduced carbon footprint, keeping a tight tracking to traditional core indices. These ETFs would be suitable for investors looking to invest in core exposures that are article 8 compliant and those seeking a tight tracking versus the traditional benchmarks such as S&P 500 and S&P World.”

The new Franklin S&P 500 Screened UCITS ETF and the Franklin S&P World Screened UCITS ETF will track the S&P 500 Guarded Index and the S&P Guarded World index, respectively, investing in large and mid-capitalisation stocks in the U.S. and globally. Provided by S&P Dow Jones Indices, S&P Guarded indices aim to provide minimal performance deviation from their parent indices, while weighting securities to enhance ESG profiles and reduce carbon footprint with respect to the underlying indices. The new ETFs target a minimum 10% improvement in carbon intensity and a 10% minimum improvement in ESG rating versus their parent indices, and utilize exclusions for companies involved in controversial businesses such as thermal coal, tobacco, controversial weapons and military arms, and those that have been involved in serious ESG or UN Global Compact related controversies.

Rafaelle Lennox, Head of UCITS ETF Product Strategy, Franklin Templeton, said:

“We are pleased to have collaborated with S&P in the creation of this unique index range, the S&P Guarded index family. These indices achieve two objectives, which include an enhanced ESG and carbon emission profile while maintaining minimal performance deviation from the parent indices, S&P 500 and S&P World respectively. This is unique in the market and supports our clients’ evolving needs and priorities.”