FTSE Russell launches two new ESG index families

Nov 30th, 2017 | By | Category: ETF and Index News

FTSE Russell, one of the biggest players in the ETF indexing space, has announced the expansion of its environmental, social and governance (ESG) equity index offering with the launch of the FTSE Global Climate Index Series and the FTSE ESG Index Series.

FTSE Russell launches two new ESG index families

The indices tilt towards equities with high ESG ratings.

The FTSE Global Climate Index Series uses a modified market cap weighting scheme that utilises three climate change measures – carbon emissions, fossil fuel reserves, and green revenues data – to tilt the index towards more sustainable companies while maintaining a risk and return profile similar to broad market benchmarks. The index suite includes versions based on eligible securities from the FTSE All-World Index, the FTSE All-Share Index, and the Russell 1000 Index.

The FTSE ESG Index Series also uses a modified market cap weighting scheme to tilt index weights using FTSE Russell’s ESG Ratings. The model uses over 300 indicators across 14 themes based on public data, including tax transparency, corporate governance, water use, biodiversity, labour standards, and human rights. The index series features versions based on securities from the FTSE Developed Index, the FTSE Emerging Index, the FTSE All-Share Index, and the Russell 1000.

Tony Campos, director, ESG product management, FTSE Russell, commented: “Coming out of the COP23 there is agreement that development and adoption of green technology and services are contributing to an acceleration in the transition to a green economy. We are seeing a clear move towards integrating ESG considerations into core benchmarking tools to held align sustainability considerations with specific investment objectives.”

There are currently no ETFs listed in Europe that track FTSE Russell ESG themed indices; however, investors in Japan could try the Daiwa ETF FTSE Blossom Japan Index (1654 JP), which tracks the FTSE Blossom Japan Index and provides exposure to Japanese equities with high ESG credentials.

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