S&P Dow Jones has launched an ESG version of its iconic S&P 500 index designed to closely replicate the risk and return profile of its benchmark index.
The index is developed to serve not only as a performance tracking tool but as a building block to create new ESG index-based investment products and passive investing solutions such as exchange-traded funds (ETFs), the company says. S&P DJI expects to license the S&P 500 ESG Index and its upcoming global family of ESG indices to a range of financial services firms globally.
The S&P 500 ESG Index targets 75% of the traditional S&P 500’s market capitalisation at the industry-level based on their Global Industry Classification Standard (GICS). The index offers diversification and a profile that is closely in line with that of the US large-cap market. The companies included in the index are selected based on the S&P DJI ESG scoring methodology, powered by SAM, the unit of RobecoSAM, which specialises in providing ESG data, ratings, and benchmarking.
One of the first to use it is UBS Asset Management in Europe. "UBS aims to be the world's leading sustainable financial provider by developing innovative products to meet the evolving needs of our clients,” Ulrich Koerner, President at UBS Asset Management says.
“An increasing number of investors require indices that are aligned not only with their investment goals but also their individual and institutional values. The S&P 500 ESG Index is constructed with both of these needs in mind. Unlike many ESG indices that preceded it - which were more thematic or narrower in their focus - the S&P 500 ESG Index is broader and developed to target the core of an investor’s portfolio,” said Reid Steadman, Global Head of ESG Indices at S&P Dow Jones Indices.
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