Franklin Templeton Global Equity SRI UCITS ETF

The product excludes companies whose products or services are considered to have negative environmental or social impacts including nuclear weapons, nuclear power, thermal coal, tobacco, alcohol, gambling, military weapons, civilian firearms, GMOs and adult entertainment as well as stocks that are involved in any serious ESG controversies.

Franklin Templeton Global Equity SRI UCITS ETF is a multi-factor fund which provides global exposure to large and mid-capitalisation stocks issued by companies that are considered to be environmentally and socially responsible.  The ETF tracks the Templeton Global Equity SRI Index which consists of stocks which score highly for exposure to the investment style factors of quality, value, momentum and low volatility.  These stocks are selected from the investment universe, MSCI AC World Socially Responsible Index (MSCI ACW SRI Index).

The Templeton Global Equity SRI Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc and is comprised of approximately 230 stocks selected from the MSCI ACWI SRI Index.  The MSCI ACWI SRI (the parent index) is comprised of approximately 540 stocks and is a free float-adjusted, market-capitalisation weighted index that is designed to measure the equity market performance of companies in developed and emerging markets. 

Relative to its investment universe (the MSCI ACWI index) the MSCI ACWI SRI Index excludes companies whose products or services are considered to have negative environmental or social impacts (which the index considers to be nuclear weapons, nuclear power, thermal coal, tobacco, alcohol, gambling, military weapons, civilian firearms, GMOs and adult entertainment as well as stocks that are involved in any serious ESG controversies as defined by the Index Provider, MSCI) and includes companies with strong sustainability profiles.

The top 25% of issuers per sector are selected and stocks must have a minimum of an ‘A’ ESG rating to be eligible to join the index.

Further companies are excluded from a climate change perspective: ​

• All companies that own fossil fuel reserves used for energy purposes​
• All companies deriving any revenue from the mining of thermal coal and its sale to external parties and/or from the extraction of unconventional oil & gas​
• All companies deriving 5% or more revenue from the thermal coal-based power generation

The MSCI SRI assessment is a combination of values-based exclusions and best-in-class selection where stocks with the highest ESG scores per sector are chosen.

MSCI ESG Ratings are used to identify companies that have demonstrated an ability to manage their ESG risks and opportunities.  MSCI ESG ratings cover a seven point scale (AAA-CCC).

• Existing constituents of the Socially Responsible Index are required to have an ESG rating BB or above to remain the index
• Companies that are currently not constituents of the Socially Responsible Index are required to have an ESG rating of A or above to be considered eligible for addition.

MSCI ESG Controversies Scores are used to identify those companies that are involved in very serious controversies involving the environmental, social, or governance impact of their operations and/or products and services. (Scale 0-10).

• Existing constituents of the Socially Responsible Index are required to have an MSCI ESG Controversies Score 1 or above to remain in the index.
• Companies that are currently not constituents of the Socially Responsible Index are required to have an MSCI ESG Controversies Score of 4 or above to be considered eligible for addition.

No index has been designated as a reference benchmark for sustainability.