It is classified under Article 8 of the EU’s Sustainable Finance Disclosure Regulation , bringing the total number of Article 8 compliant ETFs to 12 in the Franklin Templeton ETF range, which has over half of its funds classified as Article 8 or 9 compliant, the firm said in a statement.

The global equity index-tracking ETF aims to provide exposure to large and mid-cap stocks of companies considered environmentally and socially responsible in developed market countries. The ETF tracks the performance of the MSCI World Select Catholic Principles ESG Universal and Low Carbon Index, the firm added.

An ETF is a basket of securities such as stocks and/or bonds that are held in a single fund that is bought or sold on an exchange. The market has surged in recent years as investors and advisors have sought lower-cost ways of obtaining market exposure. As part of its plans to grow its ETF business in Europe, Franklin Templeton also recently launched the Franklin Future of Food UCITS ETF to help create innovation and investment into new technologies, in a bid to produce more food using fewer resources. See more commentary here, here and here.

This latest ETF is focused on companies with lower carbon exposure and higher environmental, social and governance ratings. It excludes companies involved in controversial businesses, such as civilian firearms, nuclear weapons, and controversial and conventional weapons. Investment in businesses involved in gambling, tobacco, and thermal coal is significantly restricted and based on revenue generated from these activities. 

It has three additional exclusions, which consist of abortion and contraceptives, animal testing and stem cells research, to align with Catholic values. This results in a current overall MSCI ESG Rating of AA , highlighting the strength of the ETF’s sustainability profile. Over 65 per cent of stocks in the portfolio are currently achieving an MSCI ESG Rating of between A to AAA, the firm continued. It is a sub-fund of the Franklin Templeton ICAV, an Irish Collective Asset-managed Vehicle, incorporated under the laws of Ireland.

“Following the launch of the Franklin Catholic Principles Emerging Markets Sovereign Debt UCITS ETF two years ago and further to client interests, we are delighted to expand our offering of values-based products and introduce this new MSCI World Catholic Principles UCITS ETF to European investors,” Caroline Baron, head of ETF distribution, EMEA, Franklin Templeton, said.

“With this new fund we wanted to offer investors an ESG-focused global equity strategy within an ETF structure that incorporates specific Catholic values but also provides a core equity Article 8 compliant solution,” she added.

The Franklin MSCI World Catholic Principles UCITS ETF will list on the Deutsche Börse Xetra on 25 April, London Stock Exchange on 26 April and Borsa Italiana on 9 May. The ETF is registered in Austria, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Spain, Sweden and the United Kingdom.

The ETF will also provide European investors with a cost-efficient, UCITS-compliant, developed market equity exposure aligned with Catholic principles and offers a low total expense ratio at 0.27 per cent for its respective category.

It will be managed by Dina Ting , head of global index portfolio management, and Lorenzo Crosato, ETF portfolio manager, Franklin Templeton.