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State Street and DWS drop ESG from S&P 500 ETFs to align with fund naming rules
State Street Global Advisors and DWS have removed ESG from the names of their S&P 500 ESG ETFs to comply with sustainability product naming rules in Europe and the UK.
The $4.7bn SPDR S&P 500 ESG Leaders UCITS ETF (500X), the $1.7bn Xtrackers S&P 500 ESG UCITS ETF (SNPE) and $3bn Xtrackers S&P 500 Equal Weight ESG UCITS ETF (XZEW) will all see ESG removed from the name following the outcome of a consultation from the index provider S&P.
The move comes after the European Securities and Markets Authority (ESMA) updated its guidelines on ESG fund naming rules in October 2024, setting a November deadline.
Meanwhile, the UK’s Sustainability Disclosure Regulations (SDR) had stated the rules are set to come into effect on 2 December but recently granted ‘temporary flexibility’ until 2 April for firms to comply with the rules.
The changes to the ETFs are:
In a shareholder notice, DWS said: “For the avoidance of doubt, the investment objective, investment policy, risk profile and fees of each fund remain unchanged.
“Each fund remains subject to the disclosure requirements of a financial product under Article 8 of the Sustainable Finance Disclosure Regulation (SFDR).”
All changes to the funds will take effect on 10 February.
MSCI also renamed over 100 ESG indices in order to comply with the new fund naming rules in September last year.
State Street and DWS have announced that they will be dropping the ESG (Environmental, Social, and Governance) designation from their S&P 500 ETFs in order to align with fund naming rules. The decision comes after regulators raised concerns about the use of ESG in fund names, citing potential confusion for investors.
Both State Street and DWS have stated that the underlying holdings of the ETFs will not change, and that they remain committed to sustainable investing principles. However, the removal of the ESG designation will bring the funds in line with regulatory guidelines and ensure transparency for investors.
The move has sparked a debate within the industry about the importance of ESG criteria in investment decisions, with some arguing that the designation is essential for identifying socially responsible funds. However, others believe that the focus should be on the actual impact of the investments rather than the label.
Overall, State Street and DWS’s decision to drop ESG from their S&P 500 ETFs highlights the evolving landscape of sustainable investing and the need for clarity and consistency in fund naming practices. Investors should continue to monitor developments in this area to ensure that their investments align with their values and objectives.
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State Street, DWS, S&P 500 ETFs, ESG, fund naming rules, sustainable investing, environmental social governance, ESG criteria, ethical investing, index funds, asset management, financial industry, responsible investing, SRI, socially responsible investing, ETFs, investment strategies, compliance regulations.
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