CLMA and SHFT: two new ETFs from iCLIMA targeting green innovators and disruptors
iCLIMA brings two new green ETFs into the market: iClima Climate Change Solutions (CLMA ETF) and iClima Distributed Smart Energy (SHFT ETF). Those ETFs put a strong focus on companies acting directly on the decarbonization of business operations (CLMA) and decentralization of the power sector (SHFT).
What is iCLIMA and who is behind it
iClima is London based green fintech that focuses on investing in companies that can decarbonize the planet, believing the best way is to avoid carbon emissions in the first place, unlike some competitors that assume “doing less harm” is a sufficient strategy. The company uses quantifiable and tangible metrics: Potential Avoided Emissions in gigatons of CO2e per year and green and brown revenues as their key metrics, leaving aside the usual ESG scorecards.
Intro to CLMA and SHFT ETFs
Recently, iClima has launched their first pair of ETFs, CLMA and SHFT, listed on the US market and the world’s first climate change UCITS ETF, providing exposure to companies offering products and services that enable CO2e avoidance. According to Gabriela Herculano, iClima’s CEO and co-founder, “These two funds are a practical way for investors to join the next wave of companies leading the green transition”.
Herculano’s vision on CLMA and SHFT is to attract investors who are seeking to have an impactful and sustainable portfolio within new and transformational technologies.
The first ETF, iClima Climate Change Solutions (CLMA ETF), which before February 2022 was called iClima Global Decarbonization Transition Leaders, follows the index created by the same company: iClima Global Decarbonization Enablers Index. The index is a great guideline to track the performance of companies (both from the U.S. and other markets) that are selected based on a methodology that lists products and services which enable carbon dioxide avoidance. The index includes over 157 securities from five different areas:
- green energy
- green transportation
- water and waste improvements
- decarbonization enabling solutions
- sustainable products.
On the other hand, the iClima Distributed Smart Energy (SHFT ETF), previously called iClima Distributed Renewable Energy Transition Leaders, focuses on decentralizing electrical supply services in favour of smaller, more ecologic, and sustainable energy companies. It works to disrupt the fossil power grid and to replace the currently inefficient and anachronic energy network. The two key pillars of this ETF are the digitalization of energy solutions and decarbonisation of energy sources, including solar panels and energy storage. The index invests in over 50 securities from the following areas:
- residential solar panels
- electric vehicle charging
- energy storage
- smart inverters
- smart meters
- software solutions that leverage AI to manage the system
- vehicle-to-grid energy.
ESG performance of CLMA ETF and SHFT ETF based on ratings from MSCI and Morningstar
According to MSCI, CLMA ETF has a rating of AA (being ‘AAA’ is the best, and ‘CCC’ the worst) and a score of 8.5 out of 10. It is ranked on the 84th percentile among other funds within the same peer group. SHFT ETF also has a rating of ‘AA’ from MSCI and a score of 7.8 out of 10. It has a slightly lower rank, being on the 70th percentile within its peer group and in the 63rd percentile within the global universe of all funds covered by MSCI ESG Fund Ratings. This scoring means that the SHFT ETF tends to show strong and/or improving the management of financially relevant environmental, social and governance issues.
Morningstar has rated the sustainability of CLMA ETF with a two-globes score on their monthly sustainability ratings (based on a five-globes system, where five globes are the top score and indicate that the ETF faces negligible financial risks from ESG issues). By having only two globes from Morningstar, CLMA ETF is below average compared with its industry group rating in terms of ESG risk. On the other hand, it is rated at relatively low scores (=good) on the Corporate ESG Pillars rating, with values of 5.7 on Environmental Risk, 7.2 on Social Risk, 5.7 on Governance Risk and 4.0 on unallocated risk (the lower the scores, the lower the risk on these areas).
Comparing CLMA ETF vs SHFT ETF using ESG metrics
| ESG metrics | CLMA | SHFT |
| MSCI ESG Rating | AA | AA |
| MSCI ESG Quality Score | 8.5 | 7.8 |
| Global Rank (%) | 84th | 70th |
| Morningstar | 2/5 | 3/5 |
| Environmental risk | 5.7 | 4.1 |
| Social risk | 7.2 | 6.0 |
| Governance risk | 5.7 | 4.6 |
| Unallocated risk | 4.0 | 11.1 |
Complementarily, SHFT ETF has slightly better ratings from Morningstar: three-globes score on the Portfolio Sustainability Ratings, whereas on the Corporate ESG Pillars rating the ETF has a score of 4.1 on Environmental Risk, 6.0 on Social Risk, 4.6 on Governance Risk and 11.1 unallocated risk.
This makes SHFT ETF a more attractive option for investors when compared to CLMA ETF in terms of ESG risks.
ESG Analysis of Top 10 holdings of CLMA and SHFT
Regarding the holdings of both CLMA and SHFT ETFs, CLMA has almost half of its holdings (44.4%) in the United States, with a great difference to the second country on the list, Hong Kong (7.2% of the holdings). If we investigate the top 10 holdings, generally we have companies with relatively great ESG scores (excepts from XPeng Inc. that has a ‘high’ ESG risk). Most companies have either a ‘low’ or ‘medium’ ESG risk, as it can be seen in the table below.
We can also point out that the distribution of holdings is quite linear. The top 10 holdings represent near 10% of the total allocations (10.9%).
Top 10 holdings of CLMA ETF and ESG risk score
| Company | Allocation | ESG Risk score |
| BYD Company Limited Class H | 1.26% | 24.5 |
| Sociedad Quimica y Minera de Chile SA Pfd Series B | 1.15% | 27.6 |
| XPeng, Inc. ADR Sponsored Class A | 1.13% | 31.8 |
| NIO Inc. Sponsored ADR Class A | 1.12% | 25.5 |
| Aptiv PLC | 1.07% | 11.7 |
| Samsung SDI Co., Ltd | 1.06% | 21.1 |
| Generac Holdings Inc. | 1.05% | 26.8 |
| Tesla Inc | 1.05% | 28.5 |
| Applied Materials, Inc. | 1.04% | 11.6 |
| Albemarle Corporation | 1.04% | 28.7 |
For the SHFT ETF, some of the values and conclusions are different. The holdings are even more concentrated in the United States (63.7%) and the difference to the second country on the list is larger than in the CLMA case (only 5.8% of SHFT holdings are in France, 2nd largest country by allocation).
Top 10 holdings of SHFT ETF and ESG risk score
| Company | Allocation | ESG Risk score |
| Xinyi Solar Holdings Ltd. | 3.18% | 24.0 |
| BYD Company Limited Class H | 3.18% | 24.5 |
| Cleanspark, Inc. | 2.70% | 23.9 |
| Meidensha Corporation | 2.68% | 28.9 |
| Bloom Energy Corporation Class A | 2.24% | 29.7 |
| FuelCell Energy, Inc. | 2.22% | 30 |
| EVgo, Inc. Class A | 2.16% | – |
| Blink Charging Co | 2.12% | 26.8 |
| Veritone, Inc. | 2.00% | 29.4 |
| Proterra Inc. | 1.98% | – |
In addition, the top 10 holdings represent almost a quarter of the total allocations of the fund (24.5%). In this case, the ESG values are mainly at ‘medium’ risk, but at a much higher average than the holdings of CLMA, with some of the values bordering the ‘high’ risk score (above 30 points).
Are CLMA ETF and SHFT ETF good investments?
Considering the strong focus on decarbonization of businesses operations and decentralization of energy, CLMA ETF and SHFT ETF are good investments for sustainable investors. These funds create a massive opportunity for investors to join the next wave of companies that can, in iClima’s words, “Do More Good” in terms of sustainability, accomplishing a portfolio that Gabriela Herculano describes as “impactful (…) to technology-forward solutions in the ongoing fight against climate change”.
Supporting the green transition is something that is growing day by day, iClima’s initiative to invest in companies that could do an impact on the energy industry and the world’s decarbonization, in a transparent way, are extremely valuable.
Not investment advice: The information provided on this website is intended for general information purposes only and does not constitute investment advice, financial advice, trading advice, or any other sort of advice. You should conduct your due diligence and, if necessary, consult a qualified independent financial advisor before making any investment decision.
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