The transition to a net-zero emissions world by 2050 is going to take very real commitments by companies and investors to drive the change necessary to curb global warming. The IQ Cleaner Transport ETF (CLNR) provides an investment opportunity within the transportation sector and companies focusing on renewables while also donating portions of proceeds to the National Wildlife Federation to help fund its mission to save ecosystems.
CLNR seeks to provide investors with exposure to companies globally that are focused on clean energy resources, transportation equipment and services, technology that makes transportation more efficient, and infrastructure components.
CLNR seeks to track the IQ Candriam Cleaner Transport Index, which uses thematic selection to include companies involved in or related to activities that protect or achieve cleaner transportation technologies. This includes electric vehicles, bicycles, vehicle manufacturers, as well as multi-passenger vehicles, renewable energy productions in vehicles, sustainable mining for battery resources, and sustainable transportation infrastructure.
A Deeper Look at CLRN's Top Allocation
Diving into Texas Instruments, the fund’s current top allocation by weight, highlights the kinds of companies that CLNR seeks to invest in that are driving change within the transportation industry. Texas Instrument is a major manufacturer of semiconductor chips and has set stringent goals for itself to reduce its own emissions and improve the efficiency of the chips it provides, while also receiving accolades for its governance practices and philanthropy.
According to the 2020 Corporate Citizenship report from TI, the company far surpassed its emissions reductions goals of a 15% decrease in scope 1 and scope 2 greenhouse gas emissions for 2020, reaching total reductions of 22.4%. Goals for 2020 also included reducing the amount of energy needed to produce each chip by 25% from 2010 baselines; the end of 2020 brought a 40.6% energy intensity reduction per chip with new goals to reduce energy intensity 50% globally by 2025, judged on a 2015 baseline.
The company had also already almost met its waste reduction goals set for 2021 by the end of 2020. It aimed to divert 90% of materials generated from landfills in 2021, and it reached an 89.9% diversion via recycling and reusing by the end of 2020. Texas Instruments is just one of the many companies that CLNR invests in with strong commitments to emissions reductions.
CLNR invests across all caps globally, screens out companies that do not meet ESG criteria, and uses an exclusionary screen. Companies are assigned a score based on their revenue, materiality, and impact, and the top 50–80 scoring companies are included in the index; the index is weighted using a modified market cap-weighting methodology with companies weighted at a minimum of 0.25% and a maximum of 3%.
The fund is dual impact in that it has aligned with the National Wildlife Federation and donates a portion of CLNR’s management fees to the organization. CLNR focuses on the transportation industry, which makes up around 20% of emissions annually, and seeks to support the human interventions happening within the climate change arena to help reduce greenhouse gas emissions derived from fossil fuel use.
CLNR carries an expense ratio of 0.45%, is equal weighted, and had Texas Instruments as its top holding at 3.4% as of May 13.
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