Invesco Water Resources ETF's holdings are exposed to average levels of ESG risk relative to those of its peers in the Equity Miscellaneous category, thus earning it an average Morningstar Sustainability Rating of 3 globes. Competing funds in the category with ratings of 4 or 5 globes have less ESG risk in their holdings. Unlike impact, which measures positive environmental and societal outcomes attributable to an investment, ESG risk reflects the degree to which investments could be affected by material ESG issues, including climate change, biodiversity, product safety, community relations, data privacy and security, bribery and corruption, and corporate governance.
Based on its latest prospectus, sustainability or ESG factors are a focus in the investment process of Invesco Water Resources ETF. Funds with ESG-focused mandates are more likely to deliver positive sustainability outcomes. One key area of strength for Invesco Water Resources ETF is its low Morningstar Portfolio Carbon Risk Score of 9.98 and very low fossil fuel exposure over the past 12 months, which earns it the Morningstar Low Carbon Designation. Thus, the companies held in the portfolio are in general alignment with the transition to a low-carbon economy.
Its 7.5% involvement in carbon solutions is higher than the 4.7% average involvement of its peers in the Natural Resources category. Carbon solutions include products and services related to renewable energy, energy efficiency, green buildings, green transportation, and so on. No companies held by Invesco Water Resources ETF are recognized as being involved in controversies at a high or severe level. From bribery and corruption to workplace discrimination and environmental incidents, controversies are incidents that have a negative impact on stakeholders or the environment, which create some degree of financial risk for the company. Severe and high controversies can have significant financial repercussions, ranging from legal penalties to consumer boycotts. In addition, they can damage the reputation of both companies themselves and their shareholders.