SPDJI teams up with RobecoSAM to launch smart beta ESG indices

Apr 19th, 2016 | By | Category: ETF and Index News

S&P Dow Jones Indices has partnered with sustainable investing specialist RobecoSAM to launch a new index family targeting positive environmental, social and corporate governance exposures on a global and regional scale. The S&P ESG Index Series consists of the S&P Global 1200 ESG Index, the S&P 500 ESG Index, the S&P Europe 350 ESG Index and the S&P/TOPIX 150 ESG Index.

Alka Banerjee, Managing Director, Head of Product Management, S&P Dow Jones Indices

Alka Banerjee, Managing Director, Head of Product Management, S&P Dow Jones Indices.

The indices are based on existing S&P Indices which include the S&P Global 1200 Index, a composite of seven headline indices that collectively capture approximately 70% of global market capitalisation; the S&P 500 Index, a premier reference for the US large cap equity market; the S&P Europe 350 Index, consisting of 350 leading blue-chip companies drawn from 16 developed European markets; and the S&P/TOPIX 150 Index, representing the large cap equity universe of Japan.

The indices measure the performance of companies in their respective underlying index with a weighting scheme based on ESG factor scores derived from RobecoSAM’s annual Corporate Sustainability Assessment.

The assessment utilises an online questionnaire of approximately 100 questions, analysis of company documents, and is further supported by examination of media coverage, stakeholder commentaries and other publicly available sources. Rather than apply a standard template, RobecoSAM’s analysis undergoes industry-specific customisation to provide a more effective evaluation of how companies respond to the sustainability opportunities and risks that are most relevant to their operations. The assessment aims to provide an unbiased comparison of companies’ ability to generate long-term value.

ESG factors have historically shown low correlations to other traditional smart beta factors, and may therefore provide a degree of diversification to investor portfolios.

Alka Banerjee, Managing Director, Head of Product Management at S&P Dow Jones Indices, said in a statement: “Sustainability issues can be sources of substantial risks but equally, substantial opportunities. We are proud to combine our experience and extensive know-how in developing smart beta indices with RobecoSAM’s world-class ESG credentials to create the S&P ESG Index Series, a unique offering for investors who want to use ESG as a smart beta factor.”

Guido Giese, PhD, Head of Indices, RobecoSAM, added: “Now, ESG integration is accessible to each and every investor. Our new S&P ESG index family makes it easy for investors to track the performance of companies that have sustainable long-term operations without changing their standard benchmark. RobecoSAM’s Smart ESG approach represents the latest step in sustainability investing moving to the mainstream. We are pleased to partner with the leading index provider, S&P Dow Jones Indices, to bring this unique proposition to the market.”

There has been a notable uptick of interest in sustainable investing in recent years, resulting in the launch of several thematic ETFs that cover broad range of sustainability issues as well as more focused launches such as low carbon funds. This has been driven by an increased desire to make a positive impact, concerns over the burgeoning risks of climate change and a belief that incorporating environmental and social criteria into the investment process can have a significant impact on performance and risk mitigation.

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