Play a part in fighting climate change through Singapore’s first low-carbon exchange-traded fund

The climate crisis has reached a tipping point, according to a recent report by the Intergovernmental Panel on Climate Change.

The 2015 Paris Agreement envisioned signatories taking steps to limit global warming to well below 2°Celsius by the end of this century. The reality has been markedly different, with global emissions continuing to rise. At current rates, global temperatures are set to increase by 3.2°Celsius by the end of the century.

This crisis has led to a number of high-profile environmental activists drawing attention to the crisis, from teenager Greta Thunberg to former United States Vice President Al Gore and natural historian Sir David Attenborough. This has, in turn, contributed to the rise of environmental, social and governance (ESG) investing. The integration of ESG criteria into financial services to bring about sustainable development outcomes is expected to play a bigger role in the transition to a low-carbon economy.

WANTED: FINANCIAL SUPPORT FOR SEISMIC SHIFTS

In Singapore, the financial sector can play a critical role in catalysing sustainable and green finance and investing. In a speech last year, Monetary Authority of Singapore managing director Ravi Menon said that green finance is a key enabler for the transition to a sustainable future. “The transition to a low-carbon future will require fundamental changes across industries. Significant financing and investment are needed to support these shifts.”

The good news is that the volume of assets invested in sustainable projects is rising rapidly, with around one-fifth of all assets worldwide allocated in funds that use some form of ESG criteria.

However, despite the progress, green finance has not been able to reach the scale required to support a complete transition to a low-carbon global economy – and a lack of decisive action now could lead to a need for even greater investment in the medium to long term.

According to a study by the Boston Consulting Group, the volume of climate financing will have to grow over the next three decades by five to eight times the current amounts raised.  Within ASEAN, an estimated US$200 billion (S$273 billion) per year of green investment is needed till 2030 to help reach climate-change goals.

HELPING YOUR PORTFOLIO AND THE ENVIRONMENT

Lion Global Investors and OCBC Securities are blazing a new trail in the sustainable investing space here with the introduction of Singapore’s first low-carbon exchange-traded fund (ETF) – the Lion-OCBC Securities Singapore Low Carbon ETF.

The ETF aims to track the top 50 Singapore companies (including REITs and Business Trusts) by Free-Float Market Capitalisation and will focus on index decarbonisation through the reduction of the index’s weighted average carbon intensity. This measures the fund’s exposure to carbon-intensive companies.

With this ETF, investors who are keen to decarbonise their portfolios may not have to sacrifice returns or take excessive risk. The diversified portfolio allows investors to gain exposure to the top 50 Singapore companies with lower carbon intensity values and fossil fuel involvement. The index is constructed by systematically removing companies based on fossil fuel involvement level and carbon intensity performance compared to sector peers from a universe of Singapore-registered or domiciled companies.

Consumers can invest in the Lion-OCBC Securities Singapore Low Carbon ETF in two ways:

·        Secondary market: Trade on SGX through your stockbroking firm’s physical or digital channels

·        Regular saving plans: Invest through the OCBC Blue Chip Investment Plan, which offers access to blue chip shares

·        Supplementary Retirement Scheme

With the Lion-OCBC Securities Singapore Low Carbon ETF, consumers who advocate for sustainability now have a chance to influence the call to fight climate change. You can play your part – alongside companies and governments – by putting regular investments into the ETF and shape the push for greater corporate environmental responsibility.

Find out how you can do good for our planet and for your portfolio. Visit iocbc.com/sglowcarbon for more information and full disclaimers.

^{This ETF is subjected to the following principal risks including but not limited to market and credit risk, foreign exchange risk, liquidity risks and product specific risks relating to the ETF. Some or all of the risks may adversely affect the fund’s net asset value, yield, total return and/or its ability to achieve its investment objective. You should note the risk factors associated with investing in the ETF. The statements in the prospectus are intended to be summaries of some of these risks. They are by no means exhaustive and they do not offer advice on the suitability of investing in the ETF. You should read the prospectus and carefully consider the risk factors described together with all of the other information included in the prospectus before deciding whether to invest in the ETF.}

^{This article is written by Brand Studio and is for information purposes only. OCBC Securities Private Limited does not endorse and makes no representation or warranty whatsoever in respect of any view expressed here and shall not be responsible for any loss or damage whatsoever arising, directly or indirectly, howsoever as a result of any person acting on any view expressed here.}

^{This advertisement has not been reviewed by the Monetary Authority of Singapore.}