Invesco, a global independent investment management firm, has unveiled the Invesco MSCI North America Climate ETF (KLMN US), a fund designed to provide exposure to North American equities aligned with rigorous climate goals. The ETF, listed on the New York Stock Exchange with an expense ratio of 0.09%, debuts with an unprecedented $2.4 billion in assets from Finnish pension insurer Varma, marking a significant development in climate-conscious investment strategies.
The fund tracks the MSCI Global Climate 500 North America Selection Index, focusing on large- and mid-cap stocks in the US and Canada. Derived from the broader MSCI ACWI Select Climate 500 Index, the methodology excludes companies linked to ESG controversies or industries such as controversial weapons, thermal coal, and fossil fuel-based power generation, ensuring alignment with stringent environmental, social, and governance (ESG) criteria.
“We are excited to collaborate once again with MSCI and Varma on a newly developed index and ETF that will allow Varma to easily execute a large allocation that aligns precisely with their investment views,” said Brian Hartigan, Global Head of ETFs & Index Investments at Invesco.
He added, “Invesco is in a rare position to service global, institutional clients who want to leverage the liquidity and efficiency of ETFs to target important allocations in their investment portfolios.”
“I am grateful to work with MSCI, a leading global index provider, as well as Invesco, one of the world’s largest asset managers, to break new ground on the launch of KLMN. Our record-breaking $2.4 billion investment in the North American tilt of KLMN aligns with our investment in the global KLMT ETF, which launched earlier this year, to provide us with a flexible way to allocate to our precise geographical and responsible investing needs,” said Timo Sallinen, Varma’s Head of Listed Securities.
The ETF employs an optimisation model to balance environmental goals with minimal deviations in country, sector, and stock weights compared to the parent index. Key objectives include reducing carbon intensity—measured by Scope 1 and 2 emissions relative to enterprise value—by 7% annually since 2020 and by 10% annually relative to sales over the same period. Additionally, the index increases the weighting of companies with clearly defined carbon reduction targets by at least 20%. The methodology ensures the ETF aligns with ambitious climate objectives and undergoes a semi-annual review to maintain its focus. The fund represents a pivotal step in aligning investment strategies with global decarbonisation goals.
“We are pleased to collaborate with both Varma and Invesco to deliver an index for this ETF. The launch truly demonstrates how custom indexes can be used to support the unique views of large institutional investors,” said Christine Berg, Head of Americas Index at MSCI.
