WisdomTree: your partner for responsible investments

WisdomTree launched in 2006 with a simple premise: to create a better investment experience. We seek to fulfil this mission by offering more transparent investment vehicles, providing exposure to hard-to-access asset classes, and designing methodologies that focus on the future growth and sustainability of the underlying companies.

We strongly believe that Environmental, Social and Governance (ESG) principles need be addressed holistically and not simply applied to a subset of impact investments only. WisdomTree recognises that successful ESG engagement goes beyond financial returns and contributes to long-term value creation for all stakeholders. Investors need ESG partners and as a signatory to the UN Principles for Responsible Investment (UNPRI), we are committed to building a business focused on delivering the best solutions to investors while considering ESG factors.

The value of responsible investing

Responsible investing is not solely about impact investing, it’s about ensuring that investments offered have also considered non-financial factors such as environmental and societal impacts.

As one of the largest specialist ETF and ETP issuers in Europe offering a comprehensive range of products, WisdomTree needs a tailored approach to each exposure. While there is no single ESG investing solution that works for every investor, there is a strong business case for a solid ESG framework.

By focusing on transparency, communication, and analysis of ESG data, we can uncover opportunities that would have gone unnoticed and bring hidden risks to the surface.

In addition to risk mitigation, the integration of ESG factors when designing an investment strategy is receiving growing recognition that responsible investing can positively impact returns.

Our commitment to responsible investing:

+ Respond to our clients’ demands with a robust ESG framework, while keeping the investment proposition intact.

+ Reduce ESG risk and incorporate ESG characteristics by excluding companies based on norms-based and/or activity-based exclusion criteria in line with the methodology of the relevant index. Further information in relation to exclusion criteria is set out in detail below.

+ Work towards responsible investing by developing strategies that exclude companies with strong negative externalities and provide a clear and transparent framework for strategies that commit to making sustainable investments. For further information on WisdomTree's approach to sustainable investments, please refer to our Corporate Social Sustainability Report.

+ Offer a ‘best-in-class’ ESG approach to gold investing by allocating to 100% responsibly sourced LBMA Good Delivery bars with a commitment to transition to those with higher ESG credentials as the market and guidelines evolve.

+ Be at the forefront of responsible investing in commodities and their role in promoting progress towards climate change. This includes partnering with specialists to educate investors and help develop industry standards.

+ Continue to monitor developments in ESG demand and available data, adapting our frameworks to best serve our clients’ needs and requirements.

WisdomTree definitions for responsible investments

ESG Screened

ESG Integration

Energy transition themes

Sustainability-themed investing

Responsible gold

ESG screened
Strategies that exclude securities from the investable universe which have involvement in certain controversial weapons or significant involvement in unconventional oil and gas exploration/production, small arms, tobacco products and thermal coal. Additionally, such strategies exclude securities that are deemed non-compliant with the UN Global Compact (UNGC) Principles which include considerations on human rights, labour, corruption and the environment. Furthermore, securities that are in breach of United Nations (UN) sanctions are also excluded from the investment universe. Some of our UCITS ETF strategies may apply additional ESG criteria as described in the relevant Index methodology.

WisdomTree’s approach to responsible investing

We offer a variety of ESG approaches enabling clients to select the investment that best meets their needs. We will continue to monitor our investment propositions alongside evolving ESG practices and adapt to changing market landscapes and investor demands.

Our growing line-up of strategies may align with several of these approaches:

The products under these themes give investors multiple ways to express their ESG views, providing exposure to the companies, sectors and raw materials making meaningful changes to our world, both now, and in the future.

ESG screened

The following principles define the exclusions we use for selected UCITS ETFs within our range. The full list of WisdomTree’s ETFs that incorporate ESG screens can be found here.

Norms-based exclusions (using Global Standards Screening such as UNGC)
Companies found to be non-compliant with the following principles: Human Rights Principle Principle 1: support and respect the protection of internationally proclaimed human rights principle. Principle 2: make sure that they are not complicit in human rights abuses. Labour Principle 3: uphold the freedom of association and the effective recognition of the right to collective bargaining. Principle 4: elimination of all forms of forced and compulsory labour. Principle 5: effective abolition of child labour. Principle 6: elimination of discrimination in respect of employment and occupation. Environment Principle 7: support a precautionary approach to environmental challenges. Principle 8: undertake initiatives to promote greater environmental responsibility. Principle 9: encourage the development and diffusion of environmentally friendly technologies. Anti-Corruption Principle Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

Norms-based exclusions (using Global Standards Screening such as UNGC)

Companies found to be non-compliant with the following principles:

Human Rights Principle
Principle 1: support and respect the protection of internationally proclaimed human rights principle.

Principle 2: make sure that they are not complicit in human rights abuses.

Labour
Principle 3: uphold the freedom of association and the effective recognition of the right to collective bargaining.

Principle 4: elimination of all forms of forced and compulsory labour.

Principle 5: effective abolition of child labour.

Principle 6: elimination of discrimination in respect of employment and occupation.

Environment
Principle 7: support a precautionary approach to environmental challenges.

Principle 8: undertake initiatives to promote greater environmental responsibility.

Principle 9: encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption Principle
Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

Activity-based exclusions
Controversial Weapons: Companies with any involvement in certain controversial weapons or with significant ownership in such companies. Tobacco: Companies involved in the production of tobacco products or supplying tobacco-related products/services. Companies deriving more than 5% of their revenues from the distribution of tobacco products. Thermal Coal: Companies deriving more than 5% of their revenue from thermal coal extraction or having more than 5% of their revenue from thermal coal-based power generation or having more than 5% of their revenue from providing tailor-made products and services to support thermal coal extraction. Unconventional oil & gas exploration/production: Companies deriving more than 5% of their revenue from unconventional oil & gas exploration and/or production such as oil sands, Arctic oil and gas or shale energy. Small Arms: Companies deriving more than 5% of their revenue from activities connected to small arms. Such activities include the manufacturing and selling of small arms, or the manufacturing and selling of key components involved in small arms manufacture, or being involved in the distribution of small arms.

Activity-based exclusions

Controversial Weapons: Companies with any involvement in certain controversial weapons or with significant ownership in such companies.

Tobacco: Companies involved in the production of tobacco products or supplying tobacco-related products/services. Companies deriving more than 5% of their revenues from the distribution of tobacco products.

Thermal Coal: Companies deriving more than 5% of their revenue from thermal coal extraction or having more than 5% of their revenue from thermal coal-based power generation or having more than 5% of their revenue from providing tailor-made products and services to support thermal coal extraction.

Unconventional oil & gas exploration/production: Companies deriving more than 5% of their revenue from unconventional oil & gas exploration and/or production such as oil sands, Arctic oil and gas or shale energy.

Small Arms: Companies deriving more than 5% of their revenue from activities connected to small arms. Such activities include the manufacturing and selling of small arms, or the manufacturing and selling of key components involved in small arms manufacture, or being involved in the distribution of small arms.

1 ESG information is received from third party data providers or index providers where relevant. Such ESG information may be incomplete, inaccurate or unavailable. As a result, there is a risk that the index provider or other data providers (as applicable) may incorrectly assess the ESG rating of/or the involvement of a company in certain activities. This may result in the incorrect inclusion or exclusion of a security from the relevant index and therefore the portfolio of the relevant fund.