FTSE Russell Bows Taps Climate, ESG Data Models for New Indexes
The FTSE Global Climate Index Series and FTSE ESG Index Series will support investors who want to incorporate ESG factors into passive investment strategies.
FTSE Russell officials say the new FTSE Global Climate Index Series is the first product it has created that combines a smart beta factor approach alongside climate change considerations, and is based on three types of climate-related analysis—carbon emissions, fossil fuel reserves, and green revenues data. FTSE Russell’s green revenues data model is made up of 13,000 public companies and is designed to measure their revenue exposure as they “transition to the green economy.”
Meanwhile, the FTSE ESG Index is designed to help investors align investment and ESG objectives into a broad benchmark. Company weights within each index are tilted using the index provider’s ESG Ratings and the green revenue data model, and reflect the performance of eligible securities from the FTSE Developed, FTSE Emerging, FTSE All-Share and Russell 1000 Indexes.
“We are seeing a clear move towards integrating environmental, social and governance considerations into core benchmarks and passive investments as part of this trend,” says Tony Campos, director of ESG product management at FTSE Russell, in a statement. “Responding to demand from clients, we are expanding our range of climate change and ESG benchmarking tools to help align sustainability considerations with specific investment objectives.”
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