State Street Global Advisors today launched the SPDR S&P 500 ESG ETF (EFIV), which introduces a significant new player into the expanding ranks of exchange-traded funds tailored to the ESG, or environmental, social and governance movement.

State Street’s SPDR S&P 500 ETF Trust (SPY) is the granddaddy of the U.S. ETF market in terms of age (launched in 1993) and size ($289 billion-plus in assets). The company’s newest fund aims to provide a risk and return profile similar to the S&P 500 by tracking the S&P 500 ESG Index, which employs S&P DJI ESG Scores and other ESG data to select index constituents.

Specifically, the index targets 75% of the market capitalization of each of the 11 GICS, or Global Industry Classification Standard industry groups within the S&P 500. It excludes companies based on the following criteria:

• Involvement with tobacco-related products and services, based on certain levels of production, revenue or ownership.

• Involvement in controversial weapons including cluster weapons, landmines, biological or chemical weapons, depleted uranium weapons, white phosphorus weapons or nuclear weapons, or hold certain ownership stakes in a company involved in these activities as determined by Sustainalytics, an ESG research and ratings firm.

• Those having a United Nations Global Compact score in the bottom 5% of all UNGC-scored companies globally, as determined by Arabesque, a data and advisory company involved in the ESG space.

State Street says the SPDR S&P 500 ESG ETF can provide investors with ESG core exposure.

ESG investing has evolved from niche status to increasing acceptance among both retail and institutional investors. According to Morningstar, global sustainable funds (a term intermingled with ESG) saw asset flows of $45.6 billion versus outflows of $384.7 billion for the overall fund universe during the first quarter’s pandemic-fueled market meltdown.

And Morningstar noted that 23 new sustainable funds debuted in the U.S. in this year’s first half, marking the sixth consecutive year with more than 20 U.S. sustainable fund launches.

The SPDR S&P 500 ESG ETF enters the fray with a cost-competitive expense ratio of 0.10%. That’s just a hair more than the 0.09% expense ratio charged by the SPY fund.

But keep in mind that Vanguard and iShares offer rival ETFs that track the S&P 500 Index with much cheaper fees of 0.03% and 0.04%, respectively. Perhaps it’s just a matter of time before they engage in a price war of sorts by rolling out dirt-cheap ESG-themed S&P 500 ETFs.