China’s First Batch of Carbon Neutral ETF Products Approved

China’s first batch of CSI SEEE Carbon Neutral Index ETFs was officially approved on Tuesday. Eight money management companies including E Fund, GF Fund, Southern Asset Management, China Merchants Fund, Fullgoal Fund, China Universal Asset Management, ICBC Credit Suisse Asset Management and Dacheng Fund reported such ETF products in April this year.

Luo Guoqing, head of the index investment department of GF Fund, said that the CSI SEEE Carbon Neutral Index selected securities of listed companies from deep low-carbon fields and high-carbon reduction fields that contribute to addressing “carbon peaking and carbon neutrality goals” as index constituents, and allocates the number and weight of stocks in the two fields according to the carbon neutral industry emission reduction model. The move reflects the overall performance of listed companies’ securities that contribute greatly to carbon neutralization in Shanghai and Shenzhen markets.

The approval of the index fund products provides investors with new analysis tools and targets for green investment, and further enhances the ability of the capital market to serve the green transformation and upgrading of the economy. The result is that ordinary investors now have better access to green investments.

GF Fund said that the firm attaches great importance to investment opportunities under the “carbon peaking and carbon neutrality goals”, and has successively laid out “carbon neutral leading ETF”, “battery ETF” and “power ETF”, which applied for registration this April. Laying out the carbon neutral index funds, on the one hand, can guide more social funds to invest in publicly traded companies that focus on and contribute to carbon neutrality and help achieve the nation’s environmental goals. On the other hand, it is also convenient for investors to share investment opportunities in the field of carbon neutrality through public funds.

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For the long-term track of carbon neutrality, the CSI SEEE Carbon Neutral Index, jointly compiled by the China Securities Index (CSI), Shanghai Environment and Energy Exchange (SEEE), Shanghai Stock Exchange and other partners, started related work in 2019. After nearly two years of research and development, it was officially approved by the China Securities Regulatory Commission (CSRC) in August 2021 and officially released by the CSI in September. This index is the first themed index named after carbon neutrality and will be tracked by soon-to-be-released carbon neutral ETFs.

According to the SEEE, as of April 22, 2022, the CEA in the national carbon market was 189.5 million tons, with a cumulative turnover of 8.237 billion yuan. Under the vision of China’s carbon peaking and carbon neutrality goals, since the second half of 2021, many funds have increased their green investment while the number of products involving themes such as “green”, “environmental protection”, “ESG” and “low carbon” in the fund name is also increasing.