While developments in vegan food, fashion and skincare are coming on in leaps and bounds, ethical finance products that exclude animal exploitation have been scarce.
An ETF (short for Exchange Traded Fund) is an investment fund which is traded throughout the day on stock exchanges via banks, online brokers and roboadvisors. It goes up or down in value according to the price movements of stocks in the particular index it tracks.
The US Vegan Climate ETF (ticker VEGN), the first of its kind in the world, has been created by Beyond Investing, a team of experienced vegan finance professionals in the US, Switzerland and the UK. It will track the US Vegan Climate Index (ticker VEGAN) launched by Beyond Investing in June, 2018. This Index takes the Solactive US Large Cap index (a proxy for the S&P 500 Index) and excludes any stocks whose activities are incompatible with a vegan and climate-conscious approach to investing, replacing damaging stocks with midcap alternatives that meet its ethical criteria.
This means the fund avoids investing in companies whose business models rely on animal exploitation – predominantly testing and animal-derived products – as well as removing fossil fuel and environmental threats such as plastic and agrochemicals, which are harmful to wild animals.
According to Beyond Investing co-founder Claire Smith, the ETF excludes more than 40% of companies on the Solactive US Large Cap index. Included in the top 10 are tech firms such as Facebook, Microsoft and Apple. Beyond Meat, currently the only vegan publicly traded company, is also on the list. “It’s about excluding the worst offenders when it comes to animal exploitation, as well as environmental devastation,” says Smith. “And because we love humans as much as other animals, we have defense and human rights screens as well, so tobacco and weapons are out.”
Compared against the unscreened Solactive US Large Cap Index, the Vegan Climate Index has 61% less carbon, 89% less waste and 83% less water (as calculated on 30 June, 2018 by Impact Cubed).
Here’s what you need to know about this new ETF:
When is VEGN available?
The ETF will be listed on the New York Stock Exchange with the ticker VEGN and traded throughout US market hours. It will track Beyond Investing’s US Vegan Climate Index, which has been calculated live since June 2018 and is published on Bloomberg and Reuters under the ticker VEGAN as well as on the Solactive website.
Who is the ETF for?
The ETF is for investors who trade US stocks and shares via a broker, online platform or roboadvisor.
Can investors outside of the US trade VEGN?
There are some restrictions in the EU, where the new Packaged Retail and Insurance-based Investment Products (PRIIPs) regulations in the EU have caused most online brokers to remove all US ETFs from their platforms. So, in Europe only professional investors may now directly purchase US ETFs.
But, the good news is that Beyond Investing is working with banks to create European-based products based on its indexes.
According to Smith, Beyond Investing isn’t aware of such restrictions in place in any other country, but you need to do your due diligence and make enquiries.
How to buy the US Vegan Climate ETF (VEGN)
VEGN is a listed instrument, so if you have a brokerage account you should be able to find it along with other US-listed ETFs on your online brokerage platform. Alternatively you could contact your financial adviser or bank with an instruction to invest in VEGN.
Can VEGN be put into a 401K, Roth IRA, or other form of pension or superannuation product?
Each person’s pension plan is subject to different rules and you should investigate with your pension provider if they will accept an investment into VEGN. If they require information about VEGN to approve your request, get them to contact Beyond Investing.
What to do if your investment advisor doesn’t provide access to VEGN
If you have difficulties purchasing VEGN through your current investment adviser, Smith suggests you ask them to get in touch with the Beyond Investing team to organise for VEGN to be added to their approved list of investments.
How to get VEGN added to roboadvisors’ list of available funds
Contact your roboadvisor platform and ask them to get in touch with Beyond Investing to provide the required information.
How well do ethical ETFs perform financially compared with those that don’t have an ethical focus?
Regardless of how philanthropic you are, you still want a good return on investment and there can be a perception that because something is ethical, it may not perform as well financially.
According to Smith, research suggests that high sustainability scores have a positive impact on performance, with a study on 2016, 2017, and 2018 scores of various European mutual funds demonstrating higher risk-adjusted and non-risk adjusted performance, as well as reduced downside risk.
On average, they outperformed their peers, with 63% of sustainable funds finishing in the top half of their respective categories.
Year to date the performance of the US Vegan Climate Index, which the VEGN ETF seeks to track, has been greater than the market benchmark S&P500 index by some 3.6%.
Who is behind Beyond Investing?
The Beyond Investing team comprises passionate individuals who are all ethical vegans and animal activists with long, distinguished careers and experience in the finance industry:
Claire Smith is the founder of humane investment platform Beyond Investing. She is a vegan and environmentalist with 34 years’ experience in finance and investment at top-tier banks and investment houses, including UBS and Albourne Partners. Based in Switzerland she is the co-founder of Beyond Animal integrated digital platform, which aims to accelerate the growth of the global vegan economy, and invests in vegan start-ups through her Beyond Impact advisory firm.
Lee Coates has worked in the UK financial services industry for 36 years. In 1998 he created Ethical Investors, one of the UK’s leading financial planning firms for ethical, social and environmental investment. In 2010 he co-founded Cruelty Free Super, an ethical superannuation fund in Australia and in 2011 Lee was awarded an Order of the British Empire (OBE) for services to ethical business and finance.
Larry Abele has more than 20 years’ experience in the investment sector. Based in London, UK, in 2004 he founded Auriel, a $2bn absolute return fund specializing in macro, currency and equity long-short strategies, spinning out in 2010 to focus on the equity strategies, and specialize in sustainable investing.
Debra Bouton, former private wealth manager at Morgan Stanley, is heading US sales of the VEGN ETF.
Why is the VEGN ETF a big deal?
Unlike most ESG (environmental, social, governance) funds, which prioritize the environment and human rights and ignore animals, the VEGN ETF puts animal exploitation front and center in its criteria for exclusions.
“Our aim is to help vegans and animal activists take the pain out of their portfolios,” explains Smith. “So many compassionate people go to great efforts to avoid buying products that contain animal ingredients or have been subject to cruel testing, but when it comes to their investment options, they’re actively, albeit often unwittingly, supporting companies and industries that exploit and torture animals. Our ETF offers them the opportunity to invest in line with their values.”
For more information, visit the VEGN ETF website