Launches a new range of four climate-focused ESG ETFs

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Northern Trust Asset Management FlexShares® Exchange Traded Funds today announced the launch of a new suite of climate-focused environmental, social and governance (ESG) * ETFs, including:

  • FlexShares ESG & Climate US Large Cap Core Index Fund (NYSE: FEUS)

  • FlexShares ESG & Climate Developed Markets ex-US Core Index Fund (NYSE: FEDM)

  • FlexShares ESG & Climate Investment Grade Corporate Core Index Fund (NYSE: FEIG)

  • FlexShares ESG & Climate High Yield Corporate Core Index Fund (NYSE: FEHY)

The four new climate ETFs are in addition to FlexShares’ existing ESG ETF offerings, the FlexShares STOXX US ESG Select Index Fund (ESG) and the FlexShares STOXX Global ESG Select Index Fund (ESGG). The new range of funds aims to help investors improve their portfolio’s overall ESG rating and reduce carbon risk, while maintaining core exposure to equities and fixed income securities. The funds use the Northern Trust ESG Vector Score ** as well as a carbon risk rating in order to hedge ESG risks and capitalize on sustainable opportunities.

“The combination of our ESG Vector score and our carbon risk rating creates a complementary strategy to identify sustainability leaders and laggards in each sector in a consistent manner,” said Christopher Huemmer, senior investment strategist for FlexShares ETFs. “In response to increased client demand for climate investing, we have created this new suite to deliver core investment strategies that we believe are best positioned to benefit from the ongoing transition to a low-cost economy. low carbon emission. ”

The ESG Vector Score methodology developed by Northern Trust Asset Management (NTAM) seeks to identify the business issues related to ESGs that are most likely to impact a company’s financial performance and a portfolio’s return on investment. The rating methodology is based on a framework established by the Sustainable Accounting Standards Board (SASB) which seeks to identify sustainability industry leaders and mitigate sustainability risks before they affect the company’s financial statements. business and portfolio performance.

With climate change being a major concern for many investors and regulators around the world, each strategy in the core ESG ETF suite also includes a particular focus on carbon risk. In partnership with Institutional Shareholder Services (ISS), each company is screened using a carbon risk assessment methodology to determine its current carbon emissions, efforts to reduce its carbon footprint, and potential exposure to carbon risk. compared to other companies in its sector. Using these ratings, each strategy in the suite aims to reduce overall carbon emissions and carbon reserves relative to its parent index, while also targeting an overall improvement in its carbon risk rating.

The launch of FlexShares’ new ESG suite coincides with the tenth anniversary of the introduction of its first ETFs in 2011. Over the past decade, FlexShares has grown into a $ 19 billion global brand committed to addressing the complex challenges of investors by providing investment solutions that go beyond conventional “off the shelf” products. Following the brand’s expansion into the European market in January this year, FlexShares’ product line now consists of 33 unique ETFs in the US and Europe. At the heart of its targeted investment solutions are four real investment objectives: capital appreciation, risk management, income generation and liquidity management.

Darek Wojnar, Head of Funds and Managed Accounts for NTAM, added: “Over the past decade, we have defined our place in the ETF industry by focusing primarily on achieving specific investor goals with quantitative solutions. . Looking ahead to the next 10 years, we recognize the growing importance of sustainability for these goals and the need for ESG funds that can serve as a core portfolio across all asset classes. We believe this is a key area for growth as we position the company for continued success. ”

About FlexShares

FlexShares exchange traded funds are designed to pursue specific investment objectives through passive and active strategies. FlexShares offers differentiated ETF strategies that can improve and simplify the investment decision process for the long-term investor. Please visit our website or connect with us on our LinkedIn page.

About Northern Trust Asset Management

Northern Trust Asset Management is a global investment manager who helps investors navigate changing market environments, so they can confidently achieve their long-term goals. Entrusted with US $ 1.2 trillion in investor assets as of June 30, 2021, we understand that investing ultimately serves a more important purpose and believe that investors should be compensated for the risks they take – in all market environments and any investment strategy. That’s why we combine solid capital market research, expert portfolio construction and comprehensive risk management to design innovative and effective solutions that deliver targeted investment results. As committed contributors to our communities, we consider it a great privilege to serve our investors and our communities with integrity, respect and transparency.

Northern Trust Asset Management is made up of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, KK, NT Global Advisors, Inc., 50 South Capital Advisors, LLC , Belvedere Advisors LLC and the investment staff of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset services, asset management and banking services to businesses, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 22 US states and Washington, DC, and 23 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2021, Northern Trust had assets under custody / administration of US $ 15.7 trillion and assets under management of US $ 1.5 trillion. For over 130 years, Northern Trust has distinguished itself as an industry leader for its exceptional service, financial expertise, integrity and innovation. Visit Northerntrust.com or follow us on Twitter @NorthernTrust.

Northern Trust Corporation, head office: 50 South La Salle Street, Chicago, Illinois 60603 USA, limited liability company in USA. Please read our global and regulatory information.

* ESG investing is defined as the use of environmental, social and governance (ESG) criteria as a set of standards for a company’s operations that socially aware investors use to screen potential investments.

** Northern Trust’s ESG Vector Score is designed to rank companies based on their management and exposure to important ESG metrics. The score was designed to align with the standards of the Sustainability Accounting Standards Board (SASB). SASB standards were designed for investors and only focus on important financial issues depending on the industry in which the company operates. Based on this structure, the ESG vector score is a combination of individual ESG indicators, adjusted for industry membership. Click here to find out more.

Before investing, carefully consider the investment objectives, risks, fees and expenses of FlexShares. This and other information is contained in the prospectus, a copy of which can be obtained by visiting www.flexshares.com. Read the prospectus carefully before investing.

Foreside Fund Services, LLC, Distributor.

An investment in FlexShares is subject to many risks, including possible loss of capital. Fund returns may not match the performance of the respective indices. A full description of the risks can be found in the prospectus.

Significant risks

The funds are passively managed, which means that NTI does not attempt to take defensive positions in market conditions, including declining markets. Funds use a representative sampling strategy and, therefore, may experience tracking error. Because funds include and exclude securities based on ESG factors, funds may underperform the broader stock market or other funds that may or may not use ESG investment criteria. Although the underlying indices are designed to measure a portfolio of companies exhibiting certain ESG characteristics, there can be no assurance that the underlying indices or funds will be composed of such securities. The funds are undiversified, which means that performance may depend on a small number of issuers. Funds may experience increased volatility if investments are concentrated in a particular region, country, market, industry, sector or asset class. The funds may use derivatives which carry increased risks different from more traditional securities.

FEDM invests in foreign securities which can cause rapid and extreme changes in value due to less liquid markets, price and trade disputes and adverse economic, political, diplomatic, environmental, financial and regulatory factors. Investments in Japan and Europe are subject to additional risks due to political, social and economic uncertainty. Mid-cap stocks can be subject to more abrupt or erratic market movements than large companies.

FEHY and FEIG invest in debt securities which involve credit risk and the value of which generally decreases when interest rates rise. Active and frequent transactions can subject funds to increased transaction costs. FEHY invests in high yield securities which are subject to greater credit risk, price volatility and risk of loss than investment grade bonds. Corporate debt securities are subject to the risk that the issuer may not be able to pay principal and interest. Investments in bonds of non-US issuers may involve certain greater risks than those associated with US issuers.

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