S&P Dow Jones Indices (S&P DJI) has announced the launch of two indices that meet the requirements of the EU’s climate benchmarks, while signalling that it is keen to grow in this market worldwide.
It will release similar benchmarks in the coming months. These will be based on its regional and country-specific indices used in Europe, the US and developed markets, S&P DJI said.
All indices belong to its new S&P Paris-Aligned & Climate Transition (Pact) series.
The launched S&P Eurozone LargeMidCap Paris-Aligned Climate Index and the S&P Eurozone LargeMidCap Climate Transition Index are designed to meet the objectives and minimum requirements of the EU’s Paris-Aligned Benchmark (PAB) and EU Climate Transition Benchmark (CTB), it said.
S&P DJI had announced earlier in the year the concept for its indices.
The index provider is one of several that have rushed to market to offer an EU-aligned benchmark product.
It comes as the EU announced a consultation on the delegated acts that will finalise the related benchmark regulation, which forms a pillar within the EU’s Action Plan on Sustainable Finance.
Managing climate investments
S&P DJI said that the indices are developed to help investors align their investments and manage climate-related risks and opportunities.
The indices incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) on how to assess climate-related risks, opportunities and financial impacts.
They measure the performance of eligible equity securities from the S&P Eurozone LargeMidCap index, which are selected and weighted to be collectively compatible with a 1.5°C global warming climate scenario, as well as meeting several other climate-focused objectives, S&P DJI said.
Reid Steadman, managing director and global head of ESG Indices at S&P DJI, commented: “There is a growing urgency in Europe and globally to identify solutions that address the negative consequences companies and institutions face due to climate change.
“The Pact Indices provide transparency with respect to these consequences and investment strategies that address climate change risks and opportunities.”