Skip to Content

Global X Solar ETF RAYS Sustainability

Sustainability Analysis

Author Image

Sustainability Summary

Global X Solar ETF has a number of positive attributes that may appeal to sustainability-focused investors.

This fund has above-average exposure to ESG risk relative to its peers in the Equity Miscellaneous category, earning it the second-lowest Morningstar Sustainability Rating of 2 globes. Funds with 4 or 5 globes tend to hold securities that are less exposed to ESG risk. 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.

Based on its latest prospectus, sustainability or ESG factors are a focus in the investment process of Global X Solar ETF. Funds with ESG-focused mandates are more likely to deliver positive sustainability outcomes. One key area of strength for Global X Solar ETF is its low Morningstar Portfolio Carbon Risk Score of 9.40 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. Global X Solar Etf shows 96.8% involvement in carbon solutions. This percentage is high in absolute terms and surpasses the 36.6% average involvement of its peers in the Miscellaneous Sector category. Carbon solutions include products and services related to renewable energy, energy efficiency, green buildings, green transportation, and so on. The fund aims to avoid, or limit exposure to, companies in violation with international norms, such as the UN Global Compact or the Universal Declaration of Human Rights. The fund has no exposure to 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.

ESG Commitment Level Asset Manager