China is making aggressive plans to shift its stigma as a major polluter to a leader in clean energy investment. A $546 billion investment in clean energy is certainly a step in the right direction.
It’s not something the second-largest economy just decided to do in the past year. China has already been looking to make bold maneuvers in order to reduce its carbon footprint — in effect, it’s even looking to surpass the United States in terms of clean energy investment.
“China once again topped the world in clean energy investments last year, a trend that could challenge U.S. efforts to develop more homegrown manufacturing,” a Scientific American article said.
“Nearly half of the world’s low-carbon spending took place in China, according to a recent analysis from market research firm BloombergNEF,” the article added further. “The country spent $546 billion in 2022 on investments that included solar and wind energy, electric vehicles and batteries.”
An ETF Opportunity for Clean Energy in China
While there are a number of ETFs on the market that can offer clean energy exposure, getting China-specific holdings requires a more unique skew. Fortunately, investors can encapsulate this thematic exposure via the KraneShares MSCI China Clean Technology Index ETF (KGRN ).
KGRN is benchmarked to the MSCI China IMI Environment 10/40 Index, which provides exposure to Chinese companies that focus on clean technology and contribute to a more environmentally sustainable economy. The index is comprised of securities that derive at least 50% of their revenues from environmentally beneficial products and services.
The index is based on five key clean tech themes. These themes include alternative energy, water sustainability, green buildings, pollution control/prevention, and efficient energy sources. All these themes encapsulate the popular trend of environmental, social, and governance (ESG) investing.
Per its product website, KGRN provides:
- Access to China’s fast-growing environmental protection industry that has rapidly become the largest renewable energy market in the world.
- Exposure to companies that stand to benefit from China’s increased focus and spending on clean energy technologies.
- Benchmarking to an MSCI ESG Index. MSCI is the number one index provider for socially responsible investment (SRI), corporate governance, and ESG indexes, according to a 2015 survey of 1,200 participants conducted by SRI Connect and Extel.
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