Schwab publishes third-party ESG ratings for individual stocks (2023)

Third-party ESG ratings have been added to the growing list of ESG resources and investment opportunities

WESTLAKE, Texas--(BUSINESS WIRE)--Charles Schwab announced today that it has begun providing customers with access to MSCI's environmental, social and governance (ESG) ratings for individual securities. The ratings are now available to customers via the search tool on Schwab.com or by viewing the stock's Schwab Equity Ratings® report.

"More and more people want to align their investments with their beliefs and values," says Malik Sievers, director of ESG strategy at Schwab Asset Management™. "An easy way to verify a company's ESG rating during the research process is something investors today find useful when looking to integrate ESG into their portfolios and assess a company's resilience to ESG risks."

AMSCI ESG Ratingit is designed to measure a company's resilience to long-term material ESG risks in the industry. MSCI ranks more than 8,500 companies (14,000 issuers including subsidiaries). The scoring model uses a rules-based methodology to identify industry leaders and laggards based on their financially relevant ESG risk exposure and management relative to their peers. Companies are rated on a scale from AAA to CCC against the standards and performance of their industry peers.

“An ESG rating measures a company's exposure to long-term environmental, social and governance risks, but these are often not highlighted in traditional financial assessments. Investors can use ESG ratings to complement financial analysis and gain a broader view of a company's long-term potential," said Sievers.

According to SchwabOpinion report for private customers Q1 2022, nearly a quarter of clients say they now make investment decisions based on their values ​​or areas of interest, and another fifth say they would like to invest more based on their personal values ​​or interests.

This new feature is the latest example of Schwab's uncompromising commitment to helping clients customize their investment portfolios and invest based on their specific goals. Schwab recently launched a range of products and services designed to help clients customize their investments, whether specifically for ESG investments or to allow clients to build their portfolio around their personal preferences:

• In November 2021, Schwab Asset Management launched the Schwab Ariel ESG ETF, followed shortly thereafter by providing two positive Wasmer Schroeder strategies to Schwab clients.
• In March, Schwab announced the launch ofthematic inventories, a new resource for self-employed investors who want to invest in stocks that align with their personal interests and values.
• Schwab introduced earlier this monthSchwab™ Custom Indexing, a new direct indexing solution that offers powerful tax administration and portfolio management capabilities for people who want to tailor their investments to their circumstances and outlook.
• Schwab also provides access to hundreds of third-party ESG products, as well as educational and assessment tools, including product listings to help customers explore the ESG space.

Schwab has also created aCenter for Environmental, Social and Governance Investments (ESG).to centralize information about ESG strategies, ESG options on Schwab and timely information.

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The Schwab Ariel ESG ETF differs from conventional ETFs.

Traditional ETFs tell the public what assets they own each day. Not this background. It could becreate additional risksfor your investment. For example:

• You may have to pay more money to trade fund shares. This fund provides less information to traders who tend to charge more for trades when they have less information.
• The price you pay to buy a fund's shares on an exchange may not reflect the value of the fund's portfolio. The same applies when you sell stocks. These price differences can be larger for this fund compared to other ETFs because it offers traders less information.
• These additional risks can be even greater in poor or uncertain market conditions.
• The ETF will post a "Proxy Portfolio" on its website each day designed to support trading in ETF stocks. Although the proxy wallet includes some ETF holdings, it is not the actual ETF wallet.

Differences between this fund and other ETFs can also bring advantages. By keeping certain information about the Fund private, the Fund may have less risk that other traders will predict or copy its investment strategy. This can improve background performance. However, if other traders are able to copy or predict the Fund's investment strategy, it could negatively affect the Fund's performance.

To learn more about the fund's unique characteristics and risks, visitProxy portfolio risk, premium/discount risk, trading stop risk, authorized participant concentration risk, tracking error risk, and fund shares can be traded at prices other than NAV on large risks and proxy and proxy portfolios of overlapsSections of the Prospectus and/or Statement that provide additional information.

Disclosure:

Investors should carefully review the information contained in the Prospectus or, if available, the Prospectus Summary, including investment objectives, risks, charges and expenses. You can obtain a brochure or, where available, a summary brochure by visitingschwabassetmanagement.com/schwabetfs_prospectus. Please read it carefully before investing.

Investment returns will fluctuate and are subject to market volatility, so an investor's stock, when traded or sold, may be worth more or less than its original cost. Unlike mutual funds, shares in ETFs cannot be individually redeemed directly from the ETF. ETF shares are bought and sold at the market price, which can be higher or lower than the NAV.

Semi-transparent (also known as opaque) active ETF risk:Active semi-transparent ETFs work differently than other exchange-traded funds (ETFs). Unlike other ETFs, an active semi-transparent ETF does not publicly disclose the full composition of its portfolio each business day, which may affect the price at which the ETF's shares are traded on the secondary market. Active semi-transparent ETFs have a limited trading history. There can be no guarantee that an active trading market will develop, sustain or function as intended. There is a risk that the market price of an active semi-transparent ETF will deviate significantly from the net asset value of the ETF and that its shares will trade with a wider bid and ask spread and therefore cost investors more than the shares of other ETFs. These risks increase during periods of market turmoil or volatility.

Proxy-Portfolio-Risk:Unlike traditional ETFs, this fund does not disclose the holdings of its portfolio (real portfolio) on a daily basis. Instead, the fund posts a proxy wallet on its website every day. The surrogate portfolio is intended to reflect the economic risks and risk characteristics of the Fund's actual positions on each trading day, but is not identical to the Fund's actual portfolio. Whilst the Proxy Portfolio is intended to provide investors with sufficient information to permit an effective arbitrage mechanism to keep the Fund's market price at or close to the Fund's underlying NAV per Share, there is a risk (which may increase during periods of disruption or market volatility) that market prices deviate significantly from the fund's underlying NAV. Trading ETFs based on a published proxy portfolio may trade with a wider bid and ask spread than ETFs that publish their portfolios on a daily basis, particularly during periods of market turmoil or volatility, and therefore may incur trading costs. trading higher for investors. While the Fund seeks to benefit from the confidentiality of its portfolio information, market participants may attempt to use the proxy portfolio to identify a Fund's trading strategy which, if successful, could result in such market participants engaging in certain predatory business practices that may be present. have the potential to harm the Fund and its Shareholders.

proxy portfolio structure– The proxy portfolio aims to replicate the daily performance of the real portfolio. This is done by performing a "factor model" analysis of the actual portfolio. The factor model consists of three sets of factors or analytical metrics: market-based factors, fundamental factors, and industry/sector factors. The fund uses a "model universe" to create its proxy portfolio. The universe of the model is composed of securities that the Fund can acquire and is a financial index or a specific portfolio of securities from which the Fund's investments are selected. The results of the factor model analysis are then applied to the model universe. The representation portfolio is then generated as a result of this analysis of the model universe, with the representation portfolio being a small subset of the model universe. The factor model is applied to both the actual portfolio and the model universe to create the fund's surrogate portfolio, which performs essentially identically to its actual portfolio.

The proxy wallet only contains investments that the Fund is authorized to hold. The Fund's SAI has more information about the proxy portfolio and its construction. Proxy Portfolio and Proxy Overlay Information on the content of the proxy portfolio and the percentage weight overlap between the proxy portfolio holdings and the actual holdings of a fund's portfolio, which formed the basis of the NPV calculation at the end of the previous business day (the portfolio overlay), is available on the Fund's websitewww.schwabassetmanagement.com.

Thematic stock listings are not intended to be investment advice or stock recommendations. Investing in stocks can be volatile and involves risks, including loss of principal. Consider your individual circumstances before investing.

Environmental, social and governance (ESG) strategies implemented by mutual funds, ETFs and separately managed accounts are currently subject to inconsistent definitions and industry standards for measuring and evaluating ESG factors; Therefore, these factors can differ significantly depending on the strategy. As such, it can be difficult to compare ESG investment products. An investment product's ESG strategy can have a significant impact on its performance. Carefully read an investment product's prospectus or prospectus to learn more about how to incorporate ESG factors into your investment strategy.

For more information, see the Charles Schwab Investment Management, Inc newsletter.

Portfolio management for Schwab Custom Indexing is provided by Charles Schwab Investment Management, Inc., dba Schwab Asset Management, a registered investment adviser and a subsidiary of Charles Schwab & Co., Inc. ("Schwab"). Both Schwab Asset Management and Schwab are separate entities and subsidiaries of the Charles Schwab Corporation.

Effective July 1, 2020, the portfolio management teams for the Wasmer-Schroeder Strategies moved to Schwab Asset Management, with Schwab Asset Management taking over portfolio management services for the Strategies. Schwab Asset Management is a registered investment adviser and affiliate of Charles Schwab & Co., Inc. ("Schwab"). Both Schwab Asset Management and Schwab are separate entities and subsidiaries of the Charles Schwab Corporation. Wasmer Schroeder's strategies are available through Schwab's Managed Account Connection® program ("Connection"). Please read Schwab's Disclosure Bulletin for important information and disclosures about Schwab's Connection and Managed Account Services®.

Schwab Asset Management™ is the dba name of Charles Schwab Investment Management, Inc. (CSIM), the investment advisor for Schwab funds, Schwab ETFs and separately managed account strategies. Schwab funds are distributed by Charles Schwab & Co., Inc. (Schwab), member of the SIPC. Schwab ETFs are distributed by SEI Investments Distribution Co. (SIDCO). Schwab Asset Management and Schwab are separate but related companies and subsidiaries of Charles Schwab Corporation and are not affiliated with SIDCO.

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Fonte: The Charles Schwab Corporation