Industry Updates

FTSE Russell launches European climate risk government bond index

George Geddes

a large plume of smoke

FTSE Russell has expanded its European fixed income offering with the launch of a government bond index that adjusts its weights based on how each country is addressing climate risk.

The Climate Risk-Adjusted European Monetary Union Government Bond index (Climate EGBI) is comprised of government bonds from European Monetary Union (EMU) countries only, the first of its kind.

EMU was launched in 1992 and means no single institution is responsible for economic policy but is instead set by the European Council.

In July 2019, FTSE Russell launched a similar global index that adjusts weights based on each county’s resilience to climate risk from 22 developed economies.

Climate EGBI is tilted more towards sovereign markets that demonstrate a greater degree of preparedness to the risks of climate change.

The index uses climate scores developed by Beyond Ratings, London Stock Exchange’s environmental, social and governance (ESG) analytics provider.

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Sylvain Chateau, co-founder and COO at Beyond Ratings, said in a statement: “There is increasing awareness of how sovereign states are uniquely exposed to the risks of climate change.

“This has in part, driven client demand for climate risk-adjusted fixed income indexes since the launch of Climate WGBI, particularly from European investors.”

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