Global asset manager Invesco announced the launch of the Invesco MSCI North America Climate ETF (KLMN), a new exchange traded fund aimed at helping investors to reduce exposure to greenhouse gas emissions and gain exposure to companies with science-based emissions reduction targets.

The new ETF is being launched with a $2.4 billion investment by Finnish pension insurer, Varma, breaking a record for funding for any ETF launch globally. The announcement follows the launch earlier this year of the Invesco MSCI Global Climate 500 ETF (KLMT), with a $1.6 billion investment by Varma.

Timo Sallinen, Varma’s Head of Listed Securities, said:

“I am grateful to work with MSCI, a leading global index provider, as well as Invesco, one of the world’s largest asset managers, to break new ground on the launch of KLMN. Our record-breaking $2.4 billion investment in the North American tilt of KLMN aligns with our investment in the global KLMT ETF, which launched earlier this year, to provide us with a flexible way to allocate to our precise geographical and responsible investing needs.”

The new ETF, now trading on the NYSE, seeks to track the MSCI Global Climate 500 North America Selection Index. According to MSCI, the index weights selected constituents with an aim to include companies that meet certain environmental and climate criteria relative to their peers. The index aims to reduce weighted average greenhouse gas emissions relative to Enterprise value including cash (EVIC) by 7% and on relative to sales by 10% on an annualized basis, and to increase the weight in companies with Science Based Targets initiative (SBTi)-approved emissions reduction targets by 20%.

MSCI designed the index with input from Varma to align with Varma’s investment parameters.

Christine Berg, Head of Americas Index at MSCI, said:

“We are pleased to collaborate with both Varma and Invesco to deliver an index for this ETF. The launch truly demonstrates how custom indexes can be used to support the unique views of large institutional investors.”

According to Invesco, the new launch comes as the thematic ETF category continues to see domestic and international growth, with U.S.-listed thematic ETFs now exceeding $439 billion, according to Bloomberg data. Invesco added that themes such as greenhouse gas and carbon emissions reductions can be useful to investors looking to express large positions through a flexible and cost-effective allocation.

Brian Hartigan, Global Head of ETFs & Index Investments at Invesco, said:
 

“We are excited to collaborate once again with MSCI and Varma on a newly developed index and ETF that will allow Varma to easily execute a large allocation that aligns precisely with their investment views. Invesco is in a rare position to service global, institutional clients who want to leverage the liquidity and efficiency of ETFs to target important allocations in their investment portfolios.”

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