For investors who are worried about climate change or cruelty to animals or even both, we now have an ETF that caters to our requirements and addresses our investment concerns.
If you’re someone like me who wish to invest in the stock market through a low-cost index Exchange Traded Fund (ETF) like the S&P 500 but minus the companies that exploit animals within it, then you may want to consider investing in the Vegan Climate ETF (Ticker: VEGN) instead.
The fund tracks the US Vegan Climate Index (Ticker: VEGAN) that screens large cap US companies for a variety of ESG (Environmental, Social & Governance) considerations, primarily avoiding animal harm and exploitation, as well as fossil fuels, environmental damage, and human rights.
I personally consider this the best and the most hardcore ESG investing of them all. Being zero animal exploitation and zero fossil fuel, it represents a portfolio of stocks with lower greenhouse gas emissions, waste generation and fresh water utilization as compared to the S&P 500 Index.
US Vegan Climate Index (Ticker: VEGAN)
By tracking the VEGAN INDEX, the VEGN ETF seeks to invest in companies that offer:
Humane approach — Seeking to provide market-capitalization-weighted exposure to US companies that satisfy its rigorous ESG standards, limiting its largest holdings to 5% of the total portfolio.
Animal-friendly — Aiming to exclude companies that harm animals, screening out companies that are involved in animal testing, animal-derived products, as well as animals in sports or entertainment.
Good for the environment & people — Screening out companies involved in fossil fuels and their use in energy production and also excluding companies involved in military and defense, as well as human rights abuses.
Why VEGN ETF?
The VEGN ETF seeks to avoid investing in companies involved in the slaughter, cruelty, and mistreatment of billions of animals each year. The company providing the INDEXand ETF, Beyond Investing LLC, states, We will not invest in any company that is reliant on one or more of the following areas:
ANIMALS
- Animal testing.
- Animal-derived products, animal farming, and other exploitation activities.
- Animals in sport and entertainment.
- Research, development, and use of genetically engineered animals.
PLANET
- Extraction or refining, or services principally related to the extraction or refining of fossil fuels.
- Burning of fossil fuels for energy production.
- Other activities having a significant negative environmental impact (e.g., high carbon intensity activities, high climate change impact, habitat destruction), unless the applicable company undertakes positive initiatives that effectively address those impacts.
PEOPLE
- Tobacco products.
- Armaments and products specifically designed for military and defence uses.
- Contributions to the abuse of human rights or lack of robust, detailed, and independently published policies covering human rights and child/forced labour.
So for investors who are worried, like me, about climate change or cruelty to animals or even both, we now have an ETF that caters to our requirements and addresses our investment concerns.
Key Takeaways
To find index members, the U.S. Vegan Climate ETF starts with the Solactive U.S. Large Cap Index, which consists of approximately 500 companies. From there, the fund removes any company involved with animal testing, animal-derived products, animal farming and animals used in sports or entertainment.
Also excluded are fossil fuel companies; those that burn fossil fuels for energy production, and any company with a significant carbon footprint or history of environmental destruction. Tobacco, military, and defense companies are also eliminated, along with companies tied to human rights abuses.
As of Dec 31, 2021, the U.S. Vegan Climate ETF held 269 companies weighted by market capitalization. Four Top holdings include Tesla (TSLA), Adobe (ADBE), and NVIDIA (NVDA). The fund held approximately $70.63 million in assets as of March 2022.
Note: For the moment, Apple (AAPL) has been removed from the list as Apple watches uses leather straps wristband and leather phone cases. However, according to Cruelty Free Investing website, Apple is investigating substitutes for leather. So I believe they will be re-added to the list as soon as this is done.
Microsoft (MSFT), for now, has also been removed from the list because of their defense contracts with the military. Association with weaponry, war, and destruction can’t qualify for both ESG & VEGN ETF requirements.
A three-person seasoned team is responsible for curating the fund. They have prior ETF experience at Charles Schwab, BlackRock, and State Street.
VEGAN INDEX & VEGN ETF
VEGAN INDEX
Through its passive rules-based approach, VEGAN INDEX seeks to avoid investments in companies whose activities directly contribute to animal suffering, destruction of the natural environment and climate change.
VEGAN INDEX is independently calculated and published real-time under its ticker: VEGAN on Bloomberg and Reuters terminals, as well as reported daily on the Solactive website.
VEGN ETF
The VEGN ETF that tracks the VEGAN INDEX is listed on the New York Stock Exchange under the ticker VEGN, with a total expense ratio of 0.60%.
The prospectus explains the Index strategy and most importantly the policies which are enshrined in the rules governing the Index.
These rules seek to address a broad range of activities that hurt animals and to exclude companies engaged in those practices from the Index. These include extraction and burning of fossil fuel due to the threat to the environment and wildlife posed by global warming.
For more detailed information about the VEGAN INDEX & VEGN ETF, how the business sectors compare to the S&P 500, the online brokers that trade them, Beyond Investing’s ethical stance, latest news, listing updates and more, you may refer to the links below:
What Is the First ‘Vegan ETF?’
Beyond Investing: US Vegan Climate ETF (Ticker: VEGN)
Beyond Investing: US Vegan Climate Index (Ticker: VEGAN)
The information provided in the links above demonstrates that it is possible to obtain broad-based market exposure, whilst adhering to animal and environmentally-friendly principles.
Excellent article.