S&P Dow Jones debuts Paris-Aligned and Climate Transition indices

Index provider S&P Dow Jones Indices has this week strengthened its portfolio of green products with the launch yesterday of two indices designed to track the performance of companies that are committed to deep decarbonisation.

The new S&P Eurozone LargeMidCap Paris-Aligned Climate Index and the S&P Eurozone LargeMidCap Climate Transition Index have been designed to incorporate a broad range of climate and sustainability-based objectives, the firm said.

Specifically, the indices will assess corporate performance against the minimum standards established through the EU's Paris-Aligned Benchmark (PAB) and Climate Transition Benchmark (CTB) set out last year by the EU Sustainable Finance Technical Expert Group (TEG). 

Similarly, the indices aim to incorporate data provided by firms reporting in line with the recommendations from the Task Force on Climate-Related Financial Disclosures' (TCFD).

"There is a growing urgency in Europe and globally to identify solutions that address the negative consequences companies and institutions face due to climate change," said Reid Steadman, global head of environmental, social, and governance (ESG) indices at S&P Dow Jones Indices. "The PACT Indices provide transparency with respect to these consequences and investment strategies that address climate change risks and opportunities." 

The new PACT Indices will draw on data provided by ESG specialist and S&P Global subsidiary Trucost.

The indices measure the performance of eligible equity securities from the S&P Eurozone LargeMidCap Index, selected and weighted to be collectively compatible with a 1.5C global warming climate scenario and to meet several other climate-focused objectives, the company said, providing investors and other market participants with a means to align their investments with the Paris Agreement and manage climate-related risks and opportunities.

It added that it plans to launch additional Paris-Aligned and Climate Transition indices based on other widely tracked regional and country-specific indices used in Europe, the US, and developed markets in the coming months.

The news came on the same day as banking giant BNP Paribas Asset Management announced it has adopted ESG indices for its global infrastructure and European small cap exchange traded funds (ETFs).

The move covers two ETFs listed on Euronext Paris and Xetra: BNP Paribas Easy ECPI Global ESG Infrastructure Equity UCITS ETF and BNP Paribas Easy MSCI Europe Small Caps SRI S-Series 5% Capped UCITS ETF.

"BNPP AM continues to improve its fund range in terms of sustainable investment and confirms its leading position as ESG ETF provider in Europe," said Isabelle Bourcier, BNPP AM's head of quantitative and index management. "We pioneered the launch of responsible ETFs, particularly with the launch of the first low carbon ETFs as early as 2008, on the circular economy in 2019 and on responsible listed real estate in 2019. Our clients increasingly want to integrate a responsible approach into their savings, which is how we are adapting our range.  This ambition is fully in line with our Global Sustainability Strategy."

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