BetaShares Sustainability Leaders Diversified Bond ETF - Currency Hedged (ASX: GBND)

Product Name

BetaShares Sustainability Leaders Diversified Bond ETF - Currency Hedged (ASX: GBND)

Issuer

BetaShares

Category

Investment

Type

Exchange Traded Fund (ETF)

Target

Wholesale, Retail, Institutional

Certified Since

2020

Asset Classes

Fixed income

Markets

Australia

Investment Approaches

Negative Screening, Positive Screening

It Includes:

  • Riaa icons 10 Renewable energy and energy efficiency

It has some level of screening for:

  • Riaa icons 41 Alcohol
  • Riaa icons 36 Armaments
  • Riaa icons 33 Fossil fuels
  • Riaa icons 50 Nuclear power
  • Riaa icons 99 Pornography
  • Riaa icons 35 Tobacco

It fully excludes:

  • Riaa icons 56 Animal cruelty
  • Riaa icons 52 Human rights abuses
  • Riaa icons 38 Labour rights violations

Overview

GBND aims to track the performance of an index (before fees and expenses) that comprises a portfolio of global and Australian bonds screened to exclude issuers with material exposure to fossil fuels or engaged in activities deemed inconsistent with responsible investment considerations. At least 50% of GBND’s portfolio is made up of “green bonds”, issued specifically to finance environmentally friendly projects, as certified by the Climate Bonds Initiative. General bond eligibility requirements: - must be rated investment grade at a minimum by either Standard & Poors or Moody’s Investor Services (if a bond is not rated, the bond issuer must satisfy the minimum rating) - must have at least 1 year to maturity - only senior or higher ranked debt instruments are eligible. Bonds that satisfy the above criteria must then qualify as either green bonds or other ESG-screened bonds, as set out below. Green bonds • must be green bonds as defined by the Climate Bonds Initiative; and • must have an outstanding amount of at least 300 million in their respective currency. Other ESG-screened bonds These are non-green bonds that, in addition to having passed the ESG-screens, also satisfy the following requirements: • must be denominated in Australian dollars and be issued in the Australian market; • bond issuers must be non-sovereign issuers (i.e. Commonwealth Government bonds are excluded); and • must have an amount outstanding of at least AUD500 million.


Description


BetaShares Sustainability Leaders Diversified Bond ETF – Currency Hedged (ASX:GBND) provides exposure to a globally diverse range of fixed-rate bonds that either directly help finance environmentally supportive projects (i.e. “green bonds”) or raise funding for companies that meet stringent environmental, social and governance (ESG) guidelines for socially-responsible behaviour. 

Specially, for any bond to be included in the Index that GBND aims to track, its issuer must not have material exposure to the fossil fuel industry or a wide range of other activities considered to carry significant ESG risks.

The fossil fuels exclusion covers the mining, extraction, or burning of fossil fuels, or the maintenance of material fossil fuel reserves or fossil fuels infrastructure. Issuers providing material financing to the fossil fuels industry are also excluded (although green bonds from such issuers may be eligible, subject to materiality thresholds). 

Other excluded activities cover:
Solactive Australian and Global Select Sustainability Leaders Bond TR Index - AUD Hedged (the “Index”)
•  Gambling; •  Tobacco; •  Uranium and nuclear energy; •  Armaments and militarism; •  Destruction of valuable environments; •  Animal cruelty; 
•  Chemicals of concern; •  Alcohol; •  Junk foods; •  Pornography; •  Human and labour rights violations; •  Lack of board-level gender diversity.
Certain materiality thresholds are applied in the screening process. 

The above screens apply to all bond issuers other than sovereign bond issuers. Sovereign bond issuers are screened to remove any issuers that are subject to current sanctions as a result of human rights concerns imposed by international bodies such as the United Nations and European Union.
These issuer-based screens seek to ensure that even if a bond might be used to finance specific environmental projects, investors are not supporting issuers that are nonetheless more broadly engaged in activities inconsistent with their values.

Along with screening out certain bond issuers, another aim of GBND is to provide significant exposure to bonds specifically issued to finance environmentally friendly projects (“green bonds”).  While issuers often label their bonds as green or climate friendly, the Index which GBND aims to track only selects from green bonds that satisfy standards set by the internationally recognised non-profit organisation, the Climate Bonds Initiative (CBI). 

To be defined as a “green bond” by the CBI, at least 95% of monies raised from a bond must be clearly earmarked to finance recognised types of climate friendly projects. Acceptable projects, for example, can include those designed to prevent or reduce pollution, improve the sustainable use of natural resources, or help in the transition to “cleaner” non-fossil fuel-based technologies.  

Other products certified by the Responsible Investment Association Australasia (RIAA)

BetaShares Australian Sustainability Leaders ETF (ASX: FAIR)

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

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