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Invesco Water Resources ETF PHO Sustainability

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Sustainability Analysis

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Sustainability Summary

Invesco Water Resources ETF has a number of positive attributes that may appeal to sustainability-focused investors.

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. The fund's current involvement in fossil fuels rests at 0.9%, which compares favorably with 29.0% for its average category peer. Companies are considered involved in fossil fuels if they derive some revenue from thermal coal, oil, and gas. Invesco Water Resources Etf shows 7.8% involvement in carbon solutions. This percentage surpasses the 4.3% 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.

Invesco Water Resources ETF has a 12-month asset-weighted Carbon Risk Score of 10.0. This is situated at the lower end of the medium carbon risk band, suggesting that its portfolio holdings are not among the worst-positioned to transition to a low-carbon economy, but they are not among the best-positioned either. Investors concerned about the transition risks may prefer to consider funds with negligible or low carbon risk. Such funds invest in companies that tend to operate in sectors less exposed to the transition (such as healthcare and IT) and/or companies in more carbon-intensive sectors (such as industrials and utilities) but that consider climate change in their business strategy and products, and therefore are positively aligned with the transition.

ESG Commitment Level Asset Manager