![\"\"](\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2022\/12\/CSOP-Low-Carbon-ETF-1.png\")
<\/a><\/p>\nWhy ESG investing is on a slow start<\/strong><\/h2>\nWhile many investors would want to make a social impact and earn positive returns at the same time, they are usually sitting on the sidelines probably due to the reasons below:<\/p>\n
\n- ESG adoption usually means higher costs involved (think solar panels installation) and hence, lower returns<\/li>\n
- Fear of \u201cGreenwashing\u201d \u2013 where companies appear \u2018socially responsible\u2019 but is actually breaking their promise to environmentally conscious consumers<\/li>\n
- Lack of knowledge for ESG Investment products<\/li>\n<\/ol>\n
To be honest, I myself have not really explored ESG investing but that being said, one ETF caught my attention due to its focus on environmental, social, and governance (ESG) criteria, as well as its potential to provide long-term capital appreciation.<\/p>\n
Introducing CSOP CGS-CIMB APAC Low Carbon Index ETF (LCU\/LCS)<\/strong><\/h2>\nCSOP CGS-CIMB FTSE Asia Pacific Low Carbon Index ETF is an ESG-focused ETF that tracks the FTSE Asia Pacific Low Carbon Index.<\/p>\n
![\"\"](\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2022\/12\/CSOP-Low-Carbon-ETF-2.png\")
<\/a><\/p>\nAccording to the prospectus, it is composed of large and mid-cap stocks from the Asia Pacific region that have been screened for their ESG characteristics and meet certain carbon emission criteria.<\/p>\n
On top of that, the Index is pretty diversified given that it owns more than 200 as of 31st August 2022*.<\/p>\n
![\"\"](\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2022\/12\/CSOP-Low-Carbon-ETF-3.png\")
<\/a><\/p>\n*The above is for illustration purpose, not to be taken as a recommendation to buy\/sell in the above-mentioned securities*<\/em><\/p>\nThe top 10 constituents in the ETF are also familiar household names such as Samsung, Toyota, Alibaba and AIA Group. Taiwan Semiconductor Manufacturing (TSM.NY), the stock with the highest weightage of 4.23%, also recently came into the limelight when Warren Buffett took a sizable stake in it.<\/p>\n
With that, lets talk about 5 things I like about this ETF.<\/p>\n
#1 Doing my part for the World <\/strong><\/h2>\nAlthough it sounds clich\u00e9, as a parent with kids, I am always all in for investments that will help to make the world a better place especially for the next generation.<\/p>\n
Hence, the ETF serves as a good opportunity to invest in companies that are taking steps to reduce their carbon emissions via a nice systematic methodology.<\/p>\n
Out of the whole FTSE Asia Pacific Index, they do an exclusion of companies involved with controversial product activities including controversial weapons; tobacco, thermal coal and UN Global Compact (UNGC) controversies.<\/p>\n
![\"\"](\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2022\/12\/CSOP-Low-Carbon-ETF-4.png\")
<\/a><\/p>\nSource: FTSE Russell; ^FTSE Russell. As of 2022\/9\/19, the first day after annual rebalancing took effect. * Z-Score formula for the index: <\/em>\ud835\udc4d\ud835\udc39,<\/em>\ud835\udc56 = <\/em>\ud835\udc39\ud835\udc56\u2212<\/em>\ud835\udf07\ud835\udc39 <\/em>\ud835\udf0e\ud835\udc39 where F <\/em>\u2208 <\/em>\u123c<\/em>\ud835\udc42\ud835\udc38, <\/em>\ud835\udc3f\ud835\udc5c\ud835\udc54(<\/em>\ud835\udc45)}<\/em><\/p>\nNext comes the weightage exercise based on the the Carbon Emissions and Fossil Fuel Reserve Intensity; companies that perform better are given higher weightage.<\/p>\n
![\"\"](\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2022\/12\/CSOP-Low-Carbon-ETF-5.png\")
<\/a><\/p>\nSource: ^FTSE Russell. As of 2022\/9\/19, the first day after annual rebalancing took effect Note: *Emission\/Reserve Intensity are calculated at regular index reviews<\/em><\/p>\nAccording to their 7-year average historical data, the FTSE Asia Pacific Low Carbon Select Index lowered the carbon intensity and reserve intensity much more than the parent index of 62.4% and 93.6% respectively.<\/p>\n
#2 Exposure to APAC\u2019s huge growth<\/strong><\/h2>\nThe APAC region accounts for and is forecast to grow at a much faster pace compared to Europe and U.S. in the next 2 decades.<\/p>\n
In fact, de-globalization has led to many APAC countries forming regional free-trade agreements such as Regional Comprehensive Economic Partnership (RCEP) and localized value chains which will benefit them more in future.<\/p>\n
On top of that, everyone knows that the developed nations from U.S. and Europe are already getting the ball rolling when it comes to impact investing and sustainable development.<\/p>\n
That being said, the APAC region is in dire need of transiting to a low carbon future because according to IMF, parts of Asia will experience extreme weather by 2050.<\/p>\n
These scenarios like what we always see on movies may be coming sooner than we think: deadly heat waves, extreme rainfall, severe hurricanes, droughts and water shortages.<\/p>\n
![\"\"](\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2022\/12\/CSOP-Low-Carbon-ETF-6.png\")
<\/a><\/p>\nSource: *IMF F&D \u201cAsia\u2019s Climate Emergency\u201d, September 2021. ^McKinsey Global Institute \u201cClimate risk and response in Asia\u201d, November 2020<\/em><\/p>\nAll these are expected to damage grain yields, infrastructure, workability, supply chains and production. McKinsey expects Asia will contribute to >66% of the annual global GDP loss<\/strong> from climate impact too.<\/p>\nThe strong APAC growth and climate change will literally \u2018force\u2019 governments to drive more policies towards carbon neutrality by 2050.<\/p>\n
3. Do Well, Do Good<\/strong><\/h2>\nThe other aspect I like about it is how I can do good for the environment but not sacrifice my investment returns in doing so.<\/p>\n
![\"\"](\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2022\/12\/CSOP-Low-Carbon-ETF-7.png\")
<\/a><\/p>\nSource: ^Bloomberg. As of 2022\/8\/26. #FTSE Russell, As of 2022\/8\/31<\/em><\/p>\nAs per the backtested results, the index was up around 50% if we take 18 September 2015 as the base. If I punch the 50% returns across 7 years, we would be looking at around 6% compounded annual growth rate (CAGR).<\/p>\n
This is not too shabby given 2 things \u2013 1) we just tumbled across the Covid pandemic where everyone rushed towards the SaaS stocks and 2) the ESG sentiment was not as strong back then and will definitely stick out more in future.<\/p>\n
4. Diversification with Dividends<\/strong><\/h2>\nLast but not least, the ETF offers investors exposure to companies with lower carbon emissions while also providing broad geographic and sector diversification.<\/p>\n
To be honest, I myself have not really explored ESG investing but that being said, one ETF caught my attention due to its focus on environmental, social, and governance (ESG) criteria, as well as its potential to provide long-term capital appreciation.<\/p>\n
Introducing CSOP CGS-CIMB APAC Low Carbon Index ETF (LCU\/LCS)<\/strong><\/h2>\nCSOP CGS-CIMB FTSE Asia Pacific Low Carbon Index ETF is an ESG-focused ETF that tracks the FTSE Asia Pacific Low Carbon Index.<\/p>\n
<\/a><\/p>\nAccording to the prospectus, it is composed of large and mid-cap stocks from the Asia Pacific region that have been screened for their ESG characteristics and meet certain carbon emission criteria.<\/p>\n
On top of that, the Index is pretty diversified given that it owns more than 200 as of 31st August 2022*.<\/p>\n
<\/a><\/p>\n*The above is for illustration purpose, not to be taken as a recommendation to buy\/sell in the above-mentioned securities*<\/em><\/p>\nThe top 10 constituents in the ETF are also familiar household names such as Samsung, Toyota, Alibaba and AIA Group. Taiwan Semiconductor Manufacturing (TSM.NY), the stock with the highest weightage of 4.23%, also recently came into the limelight when Warren Buffett took a sizable stake in it.<\/p>\n
With that, lets talk about 5 things I like about this ETF.<\/p>\n
#1 Doing my part for the World <\/strong><\/h2>\nAlthough it sounds clich\u00e9, as a parent with kids, I am always all in for investments that will help to make the world a better place especially for the next generation.<\/p>\n
Hence, the ETF serves as a good opportunity to invest in companies that are taking steps to reduce their carbon emissions via a nice systematic methodology.<\/p>\n
Out of the whole FTSE Asia Pacific Index, they do an exclusion of companies involved with controversial product activities including controversial weapons; tobacco, thermal coal and UN Global Compact (UNGC) controversies.<\/p>\n
<\/a><\/p>\nSource: FTSE Russell; ^FTSE Russell. As of 2022\/9\/19, the first day after annual rebalancing took effect. * Z-Score formula for the index: <\/em>\ud835\udc4d\ud835\udc39,<\/em>\ud835\udc56 = <\/em>\ud835\udc39\ud835\udc56\u2212<\/em>\ud835\udf07\ud835\udc39 <\/em>\ud835\udf0e\ud835\udc39 where F <\/em>\u2208 <\/em>\u123c<\/em>\ud835\udc42\ud835\udc38, <\/em>\ud835\udc3f\ud835\udc5c\ud835\udc54(<\/em>\ud835\udc45)}<\/em><\/p>\nNext comes the weightage exercise based on the the Carbon Emissions and Fossil Fuel Reserve Intensity; companies that perform better are given higher weightage.<\/p>\n
<\/a><\/p>\nSource: ^FTSE Russell. As of 2022\/9\/19, the first day after annual rebalancing took effect Note: *Emission\/Reserve Intensity are calculated at regular index reviews<\/em><\/p>\nAccording to their 7-year average historical data, the FTSE Asia Pacific Low Carbon Select Index lowered the carbon intensity and reserve intensity much more than the parent index of 62.4% and 93.6% respectively.<\/p>\n
#2 Exposure to APAC\u2019s huge growth<\/strong><\/h2>\nThe APAC region accounts for and is forecast to grow at a much faster pace compared to Europe and U.S. in the next 2 decades.<\/p>\n
In fact, de-globalization has led to many APAC countries forming regional free-trade agreements such as Regional Comprehensive Economic Partnership (RCEP) and localized value chains which will benefit them more in future.<\/p>\n
On top of that, everyone knows that the developed nations from U.S. and Europe are already getting the ball rolling when it comes to impact investing and sustainable development.<\/p>\n
That being said, the APAC region is in dire need of transiting to a low carbon future because according to IMF, parts of Asia will experience extreme weather by 2050.<\/p>\n
These scenarios like what we always see on movies may be coming sooner than we think: deadly heat waves, extreme rainfall, severe hurricanes, droughts and water shortages.<\/p>\n
<\/a><\/p>\nSource: *IMF F&D \u201cAsia\u2019s Climate Emergency\u201d, September 2021. ^McKinsey Global Institute \u201cClimate risk and response in Asia\u201d, November 2020<\/em><\/p>\nAll these are expected to damage grain yields, infrastructure, workability, supply chains and production. McKinsey expects Asia will contribute to >66% of the annual global GDP loss<\/strong> from climate impact too.<\/p>\nThe strong APAC growth and climate change will literally \u2018force\u2019 governments to drive more policies towards carbon neutrality by 2050.<\/p>\n
3. Do Well, Do Good<\/strong><\/h2>\nThe other aspect I like about it is how I can do good for the environment but not sacrifice my investment returns in doing so.<\/p>\n
<\/a><\/p>\nSource: ^Bloomberg. As of 2022\/8\/26. #FTSE Russell, As of 2022\/8\/31<\/em><\/p>\nAs per the backtested results, the index was up around 50% if we take 18 September 2015 as the base. If I punch the 50% returns across 7 years, we would be looking at around 6% compounded annual growth rate (CAGR).<\/p>\n
This is not too shabby given 2 things \u2013 1) we just tumbled across the Covid pandemic where everyone rushed towards the SaaS stocks and 2) the ESG sentiment was not as strong back then and will definitely stick out more in future.<\/p>\n
4. Diversification with Dividends<\/strong><\/h2>\nLast but not least, the ETF offers investors exposure to companies with lower carbon emissions while also providing broad geographic and sector diversification.<\/p>\n
<\/a><\/p>\nAccording to the prospectus, it is composed of large and mid-cap stocks from the Asia Pacific region that have been screened for their ESG characteristics and meet certain carbon emission criteria.<\/p>\n
On top of that, the Index is pretty diversified given that it owns more than 200 as of 31st August 2022*.<\/p>\n
*The above is for illustration purpose, not to be taken as a recommendation to buy\/sell in the above-mentioned securities*<\/em><\/p>\n The top 10 constituents in the ETF are also familiar household names such as Samsung, Toyota, Alibaba and AIA Group. Taiwan Semiconductor Manufacturing (TSM.NY), the stock with the highest weightage of 4.23%, also recently came into the limelight when Warren Buffett took a sizable stake in it.<\/p>\n With that, lets talk about 5 things I like about this ETF.<\/p>\n Although it sounds clich\u00e9, as a parent with kids, I am always all in for investments that will help to make the world a better place especially for the next generation.<\/p>\n Hence, the ETF serves as a good opportunity to invest in companies that are taking steps to reduce their carbon emissions via a nice systematic methodology.<\/p>\n Out of the whole FTSE Asia Pacific Index, they do an exclusion of companies involved with controversial product activities including controversial weapons; tobacco, thermal coal and UN Global Compact (UNGC) controversies.<\/p>\n Source: FTSE Russell; ^FTSE Russell. As of 2022\/9\/19, the first day after annual rebalancing took effect. * Z-Score formula for the index: <\/em>\ud835\udc4d\ud835\udc39,<\/em>\ud835\udc56 = <\/em>\ud835\udc39\ud835\udc56\u2212<\/em>\ud835\udf07\ud835\udc39 <\/em>\ud835\udf0e\ud835\udc39 where F <\/em>\u2208 <\/em>\u123c<\/em>\ud835\udc42\ud835\udc38, <\/em>\ud835\udc3f\ud835\udc5c\ud835\udc54(<\/em>\ud835\udc45)}<\/em><\/p>\n Next comes the weightage exercise based on the the Carbon Emissions and Fossil Fuel Reserve Intensity; companies that perform better are given higher weightage.<\/p>\n Source: ^FTSE Russell. As of 2022\/9\/19, the first day after annual rebalancing took effect Note: *Emission\/Reserve Intensity are calculated at regular index reviews<\/em><\/p>\n According to their 7-year average historical data, the FTSE Asia Pacific Low Carbon Select Index lowered the carbon intensity and reserve intensity much more than the parent index of 62.4% and 93.6% respectively.<\/p>\n The APAC region accounts for and is forecast to grow at a much faster pace compared to Europe and U.S. in the next 2 decades.<\/p>\n In fact, de-globalization has led to many APAC countries forming regional free-trade agreements such as Regional Comprehensive Economic Partnership (RCEP) and localized value chains which will benefit them more in future.<\/p>\n On top of that, everyone knows that the developed nations from U.S. and Europe are already getting the ball rolling when it comes to impact investing and sustainable development.<\/p>\n That being said, the APAC region is in dire need of transiting to a low carbon future because according to IMF, parts of Asia will experience extreme weather by 2050.<\/p>\n These scenarios like what we always see on movies may be coming sooner than we think: deadly heat waves, extreme rainfall, severe hurricanes, droughts and water shortages.<\/p>\n Source: *IMF F&D \u201cAsia\u2019s Climate Emergency\u201d, September 2021. ^McKinsey Global Institute \u201cClimate risk and response in Asia\u201d, November 2020<\/em><\/p>\n All these are expected to damage grain yields, infrastructure, workability, supply chains and production. McKinsey expects Asia will contribute to >66% of the annual global GDP loss<\/strong> from climate impact too.<\/p>\n The strong APAC growth and climate change will literally \u2018force\u2019 governments to drive more policies towards carbon neutrality by 2050.<\/p>\n The other aspect I like about it is how I can do good for the environment but not sacrifice my investment returns in doing so.<\/p>\n Source: ^Bloomberg. As of 2022\/8\/26. #FTSE Russell, As of 2022\/8\/31<\/em><\/p>\n As per the backtested results, the index was up around 50% if we take 18 September 2015 as the base. If I punch the 50% returns across 7 years, we would be looking at around 6% compounded annual growth rate (CAGR).<\/p>\n This is not too shabby given 2 things \u2013 1) we just tumbled across the Covid pandemic where everyone rushed towards the SaaS stocks and 2) the ESG sentiment was not as strong back then and will definitely stick out more in future.<\/p>\n Last but not least, the ETF offers investors exposure to companies with lower carbon emissions while also providing broad geographic and sector diversification.<\/p>\n<\/a><\/p>\n#1 Doing my part for the World <\/strong><\/h2>\n
<\/a><\/p>\n<\/a><\/p>\n#2 Exposure to APAC\u2019s huge growth<\/strong><\/h2>\n
<\/a><\/p>\n3. Do Well, Do Good<\/strong><\/h2>\n
<\/a><\/p>\n4. Diversification with Dividends<\/strong><\/h2>\n