SPDR MSCI ACWI Climate Paris Aligned ETF (NZAC) seeks to track the MSCI ACWI Climate Paris Aligned Index, which measures global developed and emerging market stocks that align with Paris Climate Agreement goals through reduced carbon emissions and fossil fuel exposure while maintaining broad market representation.
How It Works
The fund uses a passively managed, market-capitalization-weighted approach that applies climate screening to the MSCI All Country World Index universe. Holdings are selected and weighted based on carbon intensity metrics, fossil fuel involvement, and climate transition readiness. The index excludes companies with significant fossil fuel reserves or revenue while overweighting climate leaders. Rebalancing occurs semi-annually to maintain Paris Agreement alignment while preserving diversification across approximately 1,500+ global stocks.
Key Features
- Aligns with Paris Climate Agreement goals while maintaining broad global equity market exposure across developed and emerging markets
- Systematically reduces carbon footprint by 50%+ versus traditional global equity benchmarks through quantitative climate screening methodology
- Launched in 2022 with 0.00% expense ratio, making it one of the most cost-effective climate-focused global equity ETFs available
Risks
- This ETF can lose value if climate-focused companies underperform traditional energy sectors during commodity booms or if ESG investing falls out of favor
- Concentration risk exists as climate screening may create sector biases, potentially excluding entire industries and reducing diversification benefits compared to broad market ETFs
- Global equity exposure means potential 40-50% declines during severe bear markets, with additional volatility from emerging market holdings and currency fluctuations
Who Should Own This
Best suited as a core equity holding (30-60% of stock allocation) for ESG-conscious investors with 5+ year time horizons seeking climate-aligned global diversification. Medium-to-high risk tolerance required due to equity volatility and emerging market exposure. Ideal for investors prioritizing environmental impact alongside long-term capital appreciation in retirement or taxable accounts.