NYSE Euronext and Vigeo launch ESG indices

Apr 3rd, 2013 | By | Category: ETF and Index News

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NYSE Euronext, a leading exchange operator and index provider, has linked up with Vigeo, a France-based expert in corporate social responsibility (CSR), to launch a range of equity indices focusing on the environment, social issues and governance (ESG).

NYSE Euronext and Vigeo launch ESG indices

Exchange operator NYSE Euronext has collaborated with CSR specialist Vigeo to launch a series of ESG indices.

Indices in the new range include the Euronext Vigeo World 120, the Euronext Vigeo Europe 120, the Euronext Vigeo France 20 and the Euronext Vigeo United Kingdom 20. Two more indices – focused on the United States and the Benelux region – will be added by the end of the first half.

The indices track major listed companies across Europe, the Asia-Pacific region and North America. Components are selected on the basis of Vigeo ratings and will be updated twice a year, in May and in November.

Component stocks are the companies rated highest for control of corporate responsibility risk and contribution to sustainable development. Ratings are based on 38 criteria including respect for the environment; human rights and recognition of companies’ human capital; relations with stakeholders; corporate governance and business ethics; integrity in influencing policy and efforts to fight corruption; and the prevention of social and environmental dumping in the supply and subcontracting chain.

Vigeo draws on its existing database to analyse nearly 330 indicators for each company. Constituent weights are calculated according to their respective Vigeo scores. The weighting of each component at the review date reflects the score of the company divided by the total sum of the scores of all components.

Fabrice Rahmouni, responsible for market indices at NYSE Euronext, said: “NYSE Euronext is introducing this new range of indices in response to rising demand for responsible investment. Investors seeking long-term profits built on sustainable development are convinced that incorporating extra-financial criteria into research gives a better global view of company risk,”

He added:“Building on the high profile and reputation of NYSE Euronext and its partner Vigeo, this range of indices is designed to serve as a true benchmark for fund managers and companies interested not only in measuring their progress and achievements, but also in communicating their commitment to responsible behaviour to employees, shareholders, business partners and customers. For these businesses, the new indices are also a strong differentiator, setting them apart from the competition.”

Fouad Bensedik, Director of Methodology at Vigeo, added: “Thanks to our partnership with NYSE Euronext, our data and opinions on the corporate responsibility of the hundreds of companies we review will now reach a wider audience – financial operators keen to identify companies mastering sustainability risks.”

The indices certainly look interesting, but NYSE Euronext and Vigeo are far from the first to approach this subject. A plethora of ESG and CSR-related indices are available, including the FTSE4Good Index Series, the Dow Jones Sustainability Indexes, the MSCI ESG Indices, the S&P Carbon & ESG Indices and the Stoxx Sustainability & ESG Leaders Indices. Moreover, a number of these indices are tracked by exchange-traded funds (ETFs).

For UK and European investors, the following ETFs are available on regional exchanges:

iShares Dow Jones Global Sustainability Screened ETF (IGSG)
iShares Dow Jones Europe Sustainability Screened ETF (IESE)
db X-trackers S&P US Carbon Efficient UCITS ETF (XGRC)
UBS-ETF MSCI World Socially Responsible A (UC44)
UBS-ETF MSCI Europe & Middle East Socially Responsible A (UB39)
UBS-ETF MSCI North America Socially Responsible A (UC46)
UBS-ETF MSCI Pacific Socially Responsible A (UB45)

For US-based investors, the following are listed on the NYSE Arca:

Pax MSCI North America ESG Index ETF (NASI)
iShares MSCI KLD 400 Social Index ETF (DSI)
iShares MSCI USA ESG Select Social Index ETF (KLD)

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