Barclays and MSCI launch ESG fixed income indices

Jun 19th, 2013 | By | Category: Fixed Income

Just over a year since formally joining forces, index providers Barclays and MSCI have rolled out the Barclays MSCI ESG Fixed Income Indices, a family of fixed income indices based on environmental, social & governance (ESG) factors.

Barclays and MSCI launch ESG fixed income indices

Barclays and MSCI have launched a family of fixed income indices based on environmental, social and governance factors.

The indices, co-branded Barclays MSCI, combine Barclays’ experience in fixed income indices with MSCI’s strength in ESG analytics and represent the first time ESG considerations have been systematically integrated into bond indices.

The index family comprises more than 500 standard and bespoke indices representing the most widely used ESG strategies and investment objectives across three categories: Socially Responsible, Sustainability, and ESG weighted.

Barclays MSCI Socially Responsible (SRI) Indices exclude issuers that engage in particular businesses activities that may be restricted for certain investors and are intended for investors whose investment selections are governed by values-based policies.

Barclays MSCI Sustainability Indices apply a best-in-class methodology to select issuers (sovereign, corporate, and quasi-sovereign) with high ESG ratings relative to their peers. These indices are intended for investors who place a premium on companies’ sustainability strategies and believe ESG criteria can be applied to identify companies that are more effective in managing the ESG risks unique to their industry.

Barclays MSCI ESG Weighted Indices use ESG ratings to systematically over- and under-weight issuers within a bond index using an objective rules-based approach. These indices are targeted toward universal owners whose investment strategies express a view on the financial impact that ESG factors will have on their investments.

These indices fill a critical gap in the market by providing asset owners and managers with ESG commitments, such as UN PRI (United Nations Principles for Responsible Investing) signatories, with a comprehensive series of performance benchmarks.

Additionally, institutional investors will be able to leverage these indices to create index-linked investment products, such as exchange-traded funds (ETFs), separately managed accounts, and structured products, based on ESG investment themes.

Waqas Samad, Head of Index, Portfolio and Risk Solutions at Barclays, said: “The Barclays MSCI ESG indices represent an important milestone in the growth of the ESG fixed income sector and reflect our ongoing commitment to expand our family of index products to meet the evolving needs of fixed income investors.”

Baer Pettit, Head of the MSCI Index Business, added: “We are very pleased to collaborate with Barclays to bring these innovative products to market. The new indices provide ESG investors with fixed income assets tools to support their asset allocation decisions, benchmark performance, conduct attribution analysis as well as the ability to offer active and passive funds. We expect the fixed income benchmarks to stimulate growth of ESG investment in this key asset class.”

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