What are VanEck's Sustainable ETFs?

VanEck offers three Sustainable ETFs that aim to contribute to the sustainable future: Hydrogen ETF, Future of Food ETF, and Circular Economy ETF.

What is the risk of investing in Sustainable ETFs?

Investing in Sustainable ETFs is subject to risks, including the possible loss of principal.

Why invest in Sustainable ETFs?

Investing in Sustainable ETFs allows you to contribute to the development of the sustainable economy and support companies that are making a positive impact on the environment and society.

Sustainable ETFs

Invest in the Future of the Economy

Main Risk

Marketing Communication

Discover VanEck’s Sustainable ETF Suite

Governments, companies and individuals have ambitious goals for cutting carbon emissions and heralding far-reaching change. Investors can take part in the transition to a more sustainable economy. They can finance it, by providing capital to virtuous companies, and potentially achieve positive financial returns.

At VanEck, we offer different sustainable ETFs to suit your investment views (classified as Article 9 according to the Sustainable Finance Disclosure Regulation - SFDR).

Future of Food ETF

Access to the multi-decade transformation of the food sector
Exposure to some of the pioneering sustainable food production ’s companies
Trend driven by a growing global population and accelerating climate change
Invest across alternative proteins, food flavoring and precision agriculture

Risk of capital loss

Circular Economy ETF

Access to the current leading firms of this new economic concept
An increasingly popular business model prioritizing reuse, repair and recycling
EU aiming to a circular economy by 2050, with the Right to repair legislation as a crucial part
Businesses could benefit through lower costs and greater efficiency

Risk of capital loss

Hydrogen ETF

A key emerging renewable energy source
Governments have placed hydrogen at the center of energy transition plans
Potential applications ranging from cars to trains and airplanes
Expected to comprise a significant share of the future global energy mix¹

Risk of capital loss

How Regulation is Driving Sustainable ETFs

Growing numbers of investors are looking at investment ways that avoid harming the environment, promote social wellbeing and safeguard good corporate governance. Yet regulators and supranational entities are also acting to reinforce the trend for sustainable investing, for example through sustainable ETFs, introducing regulations and frameworks that make it easier for investors to back sustainable businesses. At the forefront of these are the UN Global Compact Principles (UNGC), the Sustainable Development Goals (SDGs) and the EU Taxonomy — all designed to help investors make informed sustainable investment decisions.

UNGC Principles
The UNGC principles are 10 pillars developed with the goal of guiding businesses to behave responsibly...

Sustainable Development Goals
The Sustainable Development Goals are 17 objectives that were adopted by 193 world leaders and...

EU Taxonomy
The EU Taxonomy is part of the European Green Deal which is leading the push for net zero carbon...

The goals of the EU Taxonomy regulation are:

Increase Transparency
Create a Common Language
Promote Sustainable Economic Activities

By forcing issuers of financial products and companies to disclose the sustainability characteristics of investments, the EU Taxonomy aims to increase transparency. This leaves less scope for greenwashing.

The EU Taxonomy also aims to create a common language for defining what is green. This should improve communication between investors, issuers, project promoters and policy makers.

The EU Taxonomy aims to channel investments, for instance through sustainable ETFs, towards sustainable economic activities that can contribute to the EU’s six environmental objectives. These range from climate change mitigation to protection of biodiversity, as set out below:

EU Taxonomy Environmental Objectives

ESG Investing and Returns

Investing sustainably need not come, for the moment, at the cost of lower investment returns. While there is no conclusive evidence about the impact on returns, as sustainable investing grows in popularity, the most sustainable companies might be rewarded. For example, banks are cutting the cost of loans to companies cutting carbon emissions. It’s possible that this might lead to higher investment returns in years to come.

Sustainable Fund Assets Increase Worldwide, 2010-2022

Source: Statista.

Take the MSCI World index, both in its environmental, social and governance (ESG) and non-ESG versions. One of the best-known global stock market indices, it gives exposure to the largest stocks. Encouragingly, the ESG version has not only achieved higher annualized returns (for a five years period) but also scored better when incorporating volatility, as expressed by the Sharpe Ratio.

5Y Total Returns

5Y Annualized Returns

Sharpe Ratio

Source: Bloomberg, data as of 31/03/24.

Calling on Private Investors to Back the Green Transition

In order to reach the 2015 Paris Agreement’s goals for a net-zero world, public investments alone are not sufficient. Private investment has a key role to play. Sustainable ETFs can represent a way to channel these investments.

Filling the Gap
Public-Private Cooperation

Preventing a climate disaster is estimated to require approximately USD2-2.8 trillion of funding annually by 2030 and far higher than around USD770 billion in 2022². Transforming energy infrastructure accounts for much of the cost.

² Source: State of Green, IEA.

Governments and private investors will have to fund the necessary projects collaboratively. High upfront costs, technical challenges and long-time horizons often require a blend of public and private financing. Blending public and private financing can de-risk these investments and attract investors. This risk sharing is known as blended finance and it is an increasingly popular way to accelerate the green transition.

Investment/spending Needs for Climate Action Per Year by 2030

(Total investment needs per year by 2030: USD 2-2.8 trillion)

swipe

Categories of investment			Needs by 2030
Transforming the energy system	Power system	Zero carbon generation	$300-400bn
		Transmission and distribution	$200-250bn
		Storage and back-up capacity	$50-75bn
		Early phase-out of coal	$40-50bn
	Transport system	Low emission transport infrastructure	$400-500bn
	Transport system	Fleet electrification/hydrogen	$100-150bn
	Industry	Energy efficiency	$10-20bn
	Industry	Industrial processes	$10-20bn
	Buildings	Electrification	$20-40bn
	Buildings	Energy efficiency and GHG abatement	$70-80bn
	Green hydrogen	Production	$20-30bn
	Green hydrogen	Transport and storage	$20-30bn
	Just transition	Targeted programmes and safety nets	$50-100bn
Coping with loss and damage			$200-400bn
Investing in adaptation and resilience			$200-250bn
Investing in natural capital		Sustainable agriculture	$100-150bn
		Afforestation and conservation	$100-150bn
		Biodiversity	$75-100bn
Migrating methane emissions from fossil fuel and waste			$40-60bn

Source: State of Green, “Finance for climate action – Scaling up investment for climate and development”.

Main Risk Factors

Risk of Investing in Smaller Companies
Foreign Currency Risk
Industry or Sector Concentration Risk
Equity Market Risk
Liquidity Risks
Limited Diversification Concentration Risk

The securities of smaller companies may be more volatile and less liquid than the securities of large companies. Smaller companies, when compared with larger companies, may have a shorter history of operations, fewer financial resources, less competitive strength, may have a less diversified product line, may be more susceptible to market pressure and may have a smaller market for their securities.

Because all or a portion of the Fund are being invested in securities denominated in foreign currencies, the Fund’s exposure to foreign currencies and changes in the value of foreign currencies versus the base currency may result in reduced returns for the Fund, and the value of certain foreign currencies may be subject to a high degree of fluctuation.

The Fund’s assets may be concentrated in one or more particular sectors or industries. The Fund may be subject to the risk that economic, political or other conditions that have a negative effect on the relevant sectors or industries will negatively impact the Fund's performance to a greater extent than if the Fund’s assets were invested in a wider variety of sectors or industries.

The prices of the securities in the Fund are subject to the risks associated with investing in the securities market, including general economic conditions and sudden and unpredictable drops in value. An investment in the Fund may lose money.

Exists when a particular financial instrument is difficult to purchase or sell. If the relevant market is illiquid, it may not be possible to initiate a transaction or liquidate a position at an advantageous or reasonable price, or at all.

The Fund may invest a relatively high percentage of its assets in a smaller number of issuers or may invest a larger proportion of its assets in a single issuer. As a result, the gains and losses on a single investment may have a greater impact on the Fund's Net Asset Value and may make the Fund more volatile than more diversified funds.

Please contact us for more information:

VanEck Netherlands, Amsterdam
Phone: +31 (0)20 719 51 00
Email: nlinfo@vaneck.com