The ESG risk of SPDR® S&P® U.S. Dividend Artcrts ESG ETF's holdings is comparable to its peers in the US Equity Large Cap Value category, thus earning an average Morningstar Sustainability Rating of 3 globes. Funds in the same category rated 4 or 5 globes tend to hold securities less exposed to ESG risk. ESG risk measures the degree to which material environmental, social, and governance issues, such as climate change, biodiversity, human capital, as well as bribery and corruption, could affect valuations. ESG risk differs from impact, which is about driving positive environmental and social outcomes for society’s benefit.
SPDR® S&P® U.S. Dividend Artcrts ESG ETF promotes ESG criteria within the meaning of Article 8 of the Sustainable Finance Disclosure Regulation. Funds in accordance with Article 8 or Article 9 are more likely to align with the expectations of an investor who cares about sustainability issues. By prospectus, the fund aims to avoid or minimize holdings in companies associated with controversial weapons, and as expected, the fund does not currently invest in such companies. The fund aims to avoid, or limit exposure to, companies in violation with international norms, such as the UN Global Compact or the Universal Declaration of Human Rights. No companies held by SPDR® S&P® U.S. Dividend Artcrts ESG ETF are recognized as being involved in controversies at a high or severe level. From bribery and corruption to workplace discrimination and environmental incidents, controversies are incidents that have a negative impact on stakeholders or the environment, which create some degree of financial risk for the company. Severe and high controversies can have significant financial repercussions, ranging from legal penalties to consumer boycotts. In addition, they can damage the reputation of both companies themselves and their shareholders.
SPDR® S&P® U.S. Dividend Artcrts ESG ETF has a 12-month asset-weighted Carbon Risk Score of 10.2. This is situated at the lower end of the medium carbon risk band, suggesting that its portfolio holdings are not among the worst-positioned to transition to a low-carbon economy, but they are not among the best-positioned either. Investors concerned about the transition risks may prefer to consider funds with negligible or low carbon risk. Such funds invest in companies that tend to operate in sectors less exposed to the transition (such as healthcare and IT) and/or companies in more carbon-intensive sectors (such as industrials and utilities) but that consider climate change in their business strategy and products, and therefore are positively aligned with the transition. Currently, the fund has 13.0% involvement in fossil fuels, which is roughly in line with 14.1% for its average category peer. Companies are considered involved in fossil fuels if they derive some revenue from thermal coal, oil, and gas.
United States