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The Consumer Discret Sel SectSPDR® ETF XLY Sustainability

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Sustainability Analysis

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Sustainability Summary

The Consumer Discret Sel SectSPDR ® has several promising attributes that may appeal to sustainability-focused investors.

The Consumer Discret Sel SectSPDR®'s holdings are exposed to average levels of ESG risk relative to those of its peers in the Consumer Goods & Services Sector Equity 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.

One key area of strength for The Consumer Discret Sel SectSPDR® is its low Morningstar Portfolio Carbon Risk Score of 6.23 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. The fund exhibits negligible exposure (1.46%) to companies with high or severe controversies. Controversies are incidents that have a negative impact on stakeholders or the environment, which create some degree of financial risk for the company. Examples of types of controversies include bribery and corruption scandals, workplace discrimination and environmental incidents. Severe and high controversies can have significant financial repercussions, ranging from legal penalties to consumer boycotts. Such controversies can also damage the reputation of both companies themselves and their shareholders.

One potential issue for a sustainability-focused investor is that The Consumer Discret Sel SectSPDR® doesn’t have an ESG-focused mandate. A fund with an ESG-focused mandate would have a higher probability to drive positive ESG outcomes.

ESG Commitment Level Asset Manager