ETF: This is how the MSCI World SRI Filtered ex Fossil Fuels works

Family relationships play an important role in the world of stock market indices. For example, a whole family of indices is derived from the industrialized countries index MSCI World. The index provider MSCI therefore appropriately calls its stock market barometer flagship parent index. However, the term child or even baby index does not exist for the other family members. They are called profane “offshoots”.

One of them is hidden behind the monster name “MSCI World SRI Filtered ex Fossil Fuels Index”. The important abbreviation SRI stands for Socially Responsible Investing. It shows that it is a sustainable index that is derived from the MSCI World. For the Stiftung Warentest it is currently the strictest of the sustainable indices that investors can follow with ETFs. “The index applies relatively strict exclusion criteria to companies,” says Bostjan Krisper from Stiftung Warentest.

In the MSCI World SRI Filtered there are no companies with a significant share of sales from controversial industries such as weapons, tobacco or coal. Companies that make sales with oil and gas production are completely taboo – hence the addition “ex Fossil Fuels”. The index provider evaluates all other companies according to sustainability criteria and divides them into sectors. In the end, only the 25 percent of the companies with the best rating from each industry are included in the index. The MSCI World SRI Filtered contains almost 380 companies, the MSCI World has a good 1,550.

The ten strongest positions in the index include the electric car manufacturer Tesla and the software group Microsoft. The US technology giants Apple, Amazon or Google are not included; they fall victim to the sustainability criteria. Incidentally, the country and sector breakdowns of the sustainable index remain deliberately similar to those of the MSCI World. In return, however, the sustainable index replicates the development of the global economy relatively well, says Bostjan Krisper: “It is therefore perfectly suitable as a foundation for a portfolio.”

The crux of the matter: That is exactly why companies from non-sustainable sectors end up in the index – such as the US airline Delta Airlines or the diesel engine manufacturer Caterpillar, which, according to critics, is one of the largest CO₂ emitters in the world. Investors can comfort themselves with the fact that no other sustainable index applied such strict criteria as this one in the Stiftung Warentest check. An ETF on the index is available from Amundi (ISIN LU1861134382).

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