This fund lands in the 10% of strategies with the lowest ESG risk in the US Equity Large Cap Value category, earning it the highest Morningstar Sustainability Rating of 5 globes. ESG risk provides investors with a signal that reflects to what degree their investments are exposed to risks related to material ESG issues, including climate change, biodiversity, product safety, community relations, data privacy and security, bribery and corruption, and corporate governance, that are not sufficiently managed. ESG risk differs from impact, which is about seeking positive environmental and social outcomes.
Nuveen ESG Dividend ETF has a sustainability or ESG-focused mandate. Funds with an ESG-focused mandate are more likely to align with the expectations of an investor who cares about sustainability issues. One key area of strength for Nuveen ESG Dividend ETF is its low Morningstar Portfolio Carbon Risk Score of 7.51 and low fossil fuel exposure of 4.87% 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 11.0% involvement in carbon solutions is higher than the 7.9% average involvement of its peers in the Large Value category. Carbon solutions include products and services related to renewable energy, energy efficiency, green buildings, green transportation, and so on.By prospectus, the fund aims to avoid, or limit its exposure to, companies associated with controversial weapons, tobacco, and small arms. The fund fulfills this goal as its investment exposure to each of these activities is negligible. The fund has little exposure (1.70%) to companies with high or severe controversies. 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.