Invesco MSCI USA ESG Climate Paris Aligned UCITS ETF

Sustainable, Responsible &/or ESG Policy:

In order to achieve the investment objective, the Fund will employ a replication method that looks to invest as far as possible and practicable in the constituents of the Reference Index. The Fund intends to replicate the Reference Index by holding all of its constituent securities in a similar proportion to their weightings in the Reference Index.

The methodology of the Reference Index applies exclusionary criteria to exclude from the MSCI USA Index (the “Parent Index”) securities that: 1) have not been assessed or rated by the Index Provider on the basis of MSCI ESG metrics (see further details below); 2) have faced severe or very severe controversies pertaining to ESG issues (including UN Global Compact violations) – defined as companies with an MSCI ESG Controversy Score of 0 or 1; 3) are involved (as defined by the Index Provider and detailed further in the methodology for the Reference Index) in any of the following business activities: controversial weapons, conventional weapons, civilian firearms, nuclear weapons, conventional and unconventional oil & gas, oil sands, shale oil, shale gas, uranium mining, thermal coal (including power generation and mining), thermal coal power, oil & gas power, nuclear power, oil & gas refining, fossil fuel reserves ownership, tobacco, recreational cannabis, adult entertainment, alcohol, gambling, GMOs and power generation from thermal coal, liquid fuel and natural gas; 4) have an MSCI ESG rating of BB or below; and 5) are categorised as investment trust companies.

The remaining constituents are then subject to an optimisation which has the aim of aligning the Reference Index to the objectives of the Paris Agreement by reducing the weighting of companies exposed to climate transition risks, maximising the weighting of companies with the highest exposure to climate transition opportunities and minimising the ex-ante tracking error relative to the Parent Index.

The Reference Index rebalances on a semi-annual basis (a “Rebalance Date”). At each rebalance, the weights of the securities are recomputed by applying the exclusionary criteria and optimisation approach described above, and changes to the components of the Reference Index are implemented at the next Rebalance Date. Between rebalances the index is reviewed on a quarterly basis screening out constituents that have breached the exclusion criteria but without applying a full rebalance. Given the climate focus of the Fund, a number of social indicators may not be relevant to the investment strategy of the Fund and as a result the methodology of the Reference Index may not specifically consider these indicators.

Where a previously eligible security subsequently ceases to meet the criteria of the Reference Index, or where the Fund acquires a security as a result of a corporate action, the Fund may continue to hold such security until such time that the security is removed as a component of the Reference Index at the next rebalance or review date.

The index methodology of the Reference Index includes good governance criteria whereby companies are assessed against indicators such as sound management structures, employee relations, remuneration of staff and tax compliance. Companies that are deemed not to meet good governance practices according to the methodology of the Reference Index will be excluded.

90% of the Fund’s NAV will be selected according to the binding elements of the investment strategy. A minimum of 80% of the Fund’s NAV will align with the sustainable investment objective of the Fund by contributing to the environmental objective of the Fund, meeting the do no significant harm criteria and good governance criteria. Up to 20% of the Fund’s NAV may not fully meet all the requirements to be deemed sustainable investments, according to Invesco’s PAI framework, as there may be certain social indicators not specifically considered by the Fund (those that are not relevant to the climate focus of the strategy). However, the investments will still be selected according to the criteria of the methodology of the Reference Index.

Up to 10% of the Fund’s NAV will be invested in financial derivative instruments for hedging and/or efficient portfolio management purposes and cash for ancillary liquidity purposes.

Process:

The Fund passively replicates the Reference Index and the primary source of third-party data is the index composition as disseminated by the index provider. Invesco may also use third-party data from other sources besides an index provider. Invesco ensures that each index provider is a Benchmark Administrator on the ESMA register that is maintained in accordance with Article 36 of the Benchmark Regulation, or is in the process of applying for inclusion on the ESMA Register or approved by endorsement or recognition by a Member State competent authority.

Invesco performs due diligence on index providers and has internal controls to monitor constituent data (please refer to the sections “Data sources and processing” and “Due diligence”), however Invesco may not in all cases be able to verify the integrity of third party data used in the index construction. In placing reliance on external data providers there may be risks associated with errors in third party data. Such errors may be undetectable by either Invesco or the index provider and can result in holdings weightings that are inconsistent with the stated methodology of the index and/or the investment objective and/or policy of the fund. The Funds could incur unexpected costs as a result such errors, for which losses Invesco and external data providers, acting in good faith, will not be held liable.

Where errors in third party data are identified, as the investment objective of the Fund is to track the index, the Fund may continue to hold investments that are inconsistent with the stated investment policy, or sustainable investments of the Fund, until such time that the data is corrected or, where the error has impacted the composition of the Reference Index, until the index provider rebalances the Reference Index. This applies to ESG data which may not only impact the Fund’s holdings but also the reporting done by the Investment Manager on the Fund’s ESG characteristics as required under relevant regulation.

Resources, Affiliations & Corporate Strategies:

Investment Stewardship at Invesco

Invesco’s dedicated Investment Stewardship team comprises over 40[1] stewardship specialists who provide expertise and support to investment teams who manage products in line with client objectives, stated investment strategies and applicable regulatory requirements. The team serves as a strategic resource to support, inform and guide Invesco’s investment teams globally on stewardship activities, including corporate governance, proxy voting and engagement, sustainable investing, and thematic investment research. Our client-centric approach is rooted in our commitment to long-term value creation for clients.

We view stewardship as a core responsibility of asset management. It encompasses our duty to act in the best interests of our clients, using our investment expertise and resources to support outcomes aligned with our clients’ objectives. This includes engaging with companies, voting proxies on behalf of clients, contributing to industry dialogue, and transparently reporting on our stewardship activities, all of which is conducted in accordance with applicable regulatory requirements and client commitments. For relevant strategies and clients, it also includes our sustainable investing capabilities.

Our Organizational Structure

The Investment Stewardship team is organized across four pillars to support investment teams across asset classes and geographies:

 Corporate Governance & Advisory

This team provides governance expertise and supports stewardship across global investment teams. The core responsibility of this team is to support investment teams in considering corporate governance factors within their investment process and to contribute to proxy voting decisions in alignment with Invesco’s stewardship principles. The team collaborates with investment teams in conducting corporate governance engagements and actively participates in industry-wide initiatives and regulatory consultations. It includes our proxy operations and voting capabilities, which execute proxy voting across thousands of shareholder meetings annually.

Stewardship Strategy, Operations & Reporting

This team ensures investment stewardship business planning aligns with Invesco’s firm-wide strategy, incorporating the firm’s priorities into our roadmap and project prioritization. It is responsible for strategy execution, operational alignment, and organizational efficiency across the Investment Stewardship department. The team manages global stewardship workflows, policy implementation, external reporting, and communications, while maintaining operational integrity and regulatory compliance.

Investment Stewardship Analytics

This team supports global stewardship through analytics, portfolio screening, and data vendor management. This team ensures investment teams have access to high-quality, decision-useful information. It also maintains data systems to streamline proxy voting and engagement workflows.

Sustainable Investing Services (SIS)

This team provides expertise and insights on environmental and social topics to support investment decision-making by conducting proprietary research and contributing to meeting client objectives for relevant products and strategies. It partners with investment teams, distribution, and clients to support engagement on sustainability topics and to meet strategy and client-specific commitments.

Global Collaboration and Governance

The Investment Stewardship team includes professionals located in North America, Asia Pacific, and EMEA, providing localized support and analysis to our investment teams across the globe. Our stewardship professionals collaborate closely with investment teams, providing support, insights, and analysis while investment teams maintain discretion on portfolio decisions. In addition, Invesco has dedicated specialists within individual investment teams across the globe who are closely connected with the Investment Stewardship team.

Our governance structure enables oversight and accountability through the Investment Stewardship Leadership Committee, comprised of senior members of the firm from various functions. This ensures that our investment teams receive appropriate guidance on stewardship considerations that are relevant to their investment strategies and processes. We also monitor external service and data providers through regular reviews and audits, meet routinely with major vendors to align methodologies and resolve issues, and increasingly automate data controls (timeliness, conformity, completeness and accuracy) for sources used in portfolio monitoring and compliance. Where gaps arise, we work to resolve them and continue to evaluate new data sets and approaches as sustainability‑related data evolves.

[1] Figure as of 31 March 2026. 

SDR Labelling:

Not eligible to use label (out of scope)

SDR Literature:

• Sustainability related disclosure