STOXX launches ESG leaders blue-chip indices

May 24th, 2012 | By | Category: ETF and Index News

STOXX, one of Europe’s leading providers of securities indices, has introduced the STOXX Europe ESG Leaders 50, EURO STOXX ESG Leaders 50, STOXX Asia/Pacific ESG Leaders 50 and STOXX North America ESG Leaders 50 indices.  The new blue-chip indices complement the existing, fully transparent STOXX Global ESG Leaders Index family.

STOXX launches ESG leaders blue-chip indices

STOXX has launched a suite of ESG leaders blue-chip indices.

STOXX also announced that the company has become a signatory to the United Nations Principles for Responsible Investment (PRI) as a professional service partner. The PRI is a global initiative which supports the integration of environmental, social and governance (ESG) issues into investment decision-making and ownership practices.

“STOXX is proud to be a signatory to the United Nations Principles for Responsible Investment, and to provide market participants with innovative tools to incorporate ESG factors into their investment decisions,” said Hartmut Graf, chief executive officer, STOXX. “With the launch of the  regional STOXX ESG Leaders blue-chip indices, we are demonstrating our commitment to this pledge, as the new indices again set standards in terms of full transparency and comprehensiveness in the ESG indexing space.”

“We are pleased to welcome STOXX as a signatory to the PRI,” said Wolfgang Engshuber, Chairman of the PRI. “Many PRI signatories have large, passive indexed holdings and are increasingly seeking indices which incorporate ESG issues to benchmark their performance. Thus, we appreciate STOXX’s commitment towards the development of sustainability indices.”

The STOXX Europe ESG Leaders 50, EURO STOXX ESG Leaders 50, STOXX Asia/Pacific ESG Leaders 50 and STOXX North America ESG Leaders 50 indices rely on the same methodology and transparent component selection as the existing STOXX Global ESG Leaders Index family, which was developed in collaboration with Sustainalytics. The index concept has been mapped to the “KPIs for ESG 3.0” standard defined by Deutsche Vereinigung für Finanzanalyse und Asset Management (DVFA) and the European Federation of Financial Analysts Societies (EFFAS), and is fully approved by both organisations.

The index universe for the new blue-chip indices is the STOXX Global ESG Leaders Index. Components are selected based on the free-float market capitalisation, and are weighted according to their overall ESG rating, i.e. the average of their Environmental (E), Social (S) and Governance (G) score.

Contrary to the existing STOXX Global ESG Leaders Index family, which is made up of three specialised indices for the categories Environmental, Social and Governance and one broad index, only one overall ESG index will be available for each regional blue-chip index. The index universe for the new regional blue-chip indices is the overall STOXX Global ESG Leaders Index.  The new blue-chip indices represent the top 50 companies in terms of market capitalisation for the respective region.

The STOXX Europe ESG Leaders 50, EURO STOXX ESG Leaders 50, STOXX Asia/Pacific ESG Leaders 50 and STOXX North America ESG Leaders 50 indices are available in price and gross return versions, as well as net return versions for Europe and the Euro zone. They are calculated in Euro, British pounds and US dollars. The indices are reviewed annually in September, with the possibility of extra-ordinary reviews in the case that a company becomes ineligible under the exclusionary criteria.

As yet, none of the planned indices is believed to have been licensed to a fund. However, the range is likely to appeal to ETF providers, as well as managers of conventional index funds and institutional investors. For investors seeking ESG exposure via London-listed ETFs, options are currently limited to the following funds from iShares and DB X-trackers:

iShares Dow Jones Global Sustainability Screened ETF (IGSG)
The iShares Dow Jones Global Sustainability Screened ETF is designed to track the performance of the Dow Jones Sustainability World Enlarged Index ex Alcohol, Tobacco, Gambling, Armaments & Firearms and Adult Entertainment Index. London listed. TER 0.60%

iShares Dow Jones Europe Sustainability Screened ETF (ISES)
The iShares Dow Jones Europe Sustainability Screened ETF is designed to track the performance of the Dow Jones Sustainability Europe Index ex Alcohol, Tobacco, Gambling, Armaments & Firearms and Adult Entertainment. London listed. TER 0.45%

DB X-trackers S&P US Carbon Efficient ETF (XGRC)
The S&P US Carbon Efficient Index ETF is designed to track the performance of no more than 375 companies with relatively low carbon emissions, while seeking to closely track the return of the S&P 500, its parent index. London listed. TER 0.50%

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