Mirae Asset Global Investments (Hong Kong) has launched the Global X Bloomberg MSCI Asia Ex Japan Green Bond ETF, its first fixed-income ETF and the world’s first green bond ETF focused on the Asia, ex-Japan, region.
It will provide exposure to investment-grade, US dollar-denominated green bonds issued in Asia, ex-Japan, to fund projects with direct and measurable environmental benefits.
The fund, began trading on the Hong Kong Stock Exchange on August 19 and tracks the Bloomberg MSCI Asia Ex Japan USD Green Bond Index, is the company’s third Hong Kong-listed ETF to be recognized by the Securities and Futures Commission of Hong Kong as an environmental, social and governance (ESG) fund.
The fund’s index uses an independent research-driven methodology performed by MSCI ESG Research to evaluate index-eligible green bonds and ensure they adhere to the Green Bond Principles. The research includes an assessment of the bonds’ stated use of proceeds, their processes for green project evaluation and selection, and management of proceeds, and their commitment to ongoing reporting on the environmental performance of the use of proceeds.
Bonds that use proceeds for at least one of six environmental categories qualify as being eligible: alternative energy, energy efficiency, pollution prevention and control, sustainable water, green building and climate adaptation.
Green bond issuance in Asia has risen exponentially as governments, government-related entities and corporations are increasingly using green bonds to finance climate action projects. The Asia-Pacific region is the world’s second-biggest issuer of green bonds with a cumulative total of US$371.7 billion in 2021, according to the Climate Bonds Initiative, and it is the world’s fastest-growing issuer with year-on-year growth of 129%.
“With Asia Pacific accounting for around half of the world’s carbon emissions and temperatures in the region rising twice as much as the global average, urgent action is required to tackle climate change,” says Jung Ho Rhee, Mirae Asset’s CEO. “[This fund] enables investors to align their portfolios with sustainability objectives and invest in climate action projects that have a positive environmental impact. Green bonds also offer the means for investors to access stable and sustainable income and can be used to add defensive resilience to portfolios.”