Tokyo Exchange to List ESG ETFs

Socially responsible funds will begin trading Sept. 26.

The Japan Exchange Group has approved the listing of three socially responsible exchange-traded funds (ETFs) created by Daiwa Asset Management on the Tokyo Stock Exchange.

The ETFs, which will be listed on Sept. 26, are the Daiwa ETF MSCI Japan Empowering Women Index, the Daiwa ETF MSCI Japan ESG Select Leaders Index, and Daiwa ETF FTSE Blossom Japan Index.

The Empowering Women Index ETF is tied to The MSCI Japan Empowering Women Index, which aims to represent the performance of companies that are leading within their sector groups in terms of promoting and maintaining gender diversity, while also meeting certain quality criteria. According to MSCI, companies that promote and maintain gender diversity among their workforce may be better able to ride out talent shortages and generate more sustainable performance with reduced risk.

The ESG Select Leaders Index ETF is intended to represent the performance of companies that have high environmental, social, and governance (ESG) performance. The index seeks to target sector weights that reflect the relative sector weights of the MSCI Japan IMI Top 500 Index, which is intended to limit the risk introduced by the ESG selection process. The index targets coverage of 50% of the parent index, the MSCI Japan IMI Top 500 Index.

The FTSE Blossom Japan Index is designed to help identify and measure the performance of Japanese companies that demonstrate strong ESG practices. The index is constructed to be industry-neutral, and uses the FTSE4Good Index Inclusion Rules, which are based on existing international standards, such as the UN Sustainable Development Goals.

ESG-related funds and investing strategies have become increasingly popular. According to a survey from BNP Paribas Securities Services, nearly 80% of asset managers and owners incorporate ESG factors into their decision-making. And in July, Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund, said it would move approximately $8.8 billion, or 3% of its passive domestic equity investments, into ESG indices.

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