Qontigo and Institutional Shareholder Services (ISS) have launched eight biodiversity equity indices ahead of Deutsche Boerse merging the businesses to create a combined ESG data and indexing unit.
The ISS STOXX Biodoversity Index Suite provides regional equity exposure to companies with positive revenue exposure to biodiversity and environmental UN Sustainable Development Goals (SDGs) while excluding those deemed to be harmful to biodiversity.
This includes screening companies with involvement in palm oil, GMO agriculture, hazardous pesticides, a negative impact on animal welfare, fur trading, tobacco, thermal coal, unconventional oil and gas, civilian firearms and military contracting.
Companies non-compliant with ISS ESG norms, involved in controversial weapons and those in the bottom 20% of ISS scoring for potentially disappeared species versus enterprise value for each sector are excluded outright.
Potential index constituents must also have some revenues related to UN SDGs and an ISS ESG SDG Solution Assessment score of at least two to be eligible for most of the new index suite.
Companies must derive at least 20% of their revenues from activities deemed to positively contribute to SDGs – such as preservation of marine ecosystems and sustainable agriculture – to be included in ISS and Qontigo’s biodiversity leaders benchmark.
The index suite contains:
ISS STOXX World AC Biodiversity Leaders index
ISS STOXX World AC Biodiversity index
ISS STOXX Asia/Pacific AC Biodiversity index
ISS STOXX Europe 600 Biodiversity index
ISS STOXX Developed Europe Biodiversity index
ISS STOXX Developed World Biodiversity index
ISS STOXX US Biodiversity index
ISS STOXX Emerging Markets Biodiversity index
The indices are priced in US dollars, except for the world biodiversity leaders and two Europe benchmarks priced in euros.
The suite targets a 30% carbon intensity reduction versus comparable parent indices.
Axel Lomholt (pictured), chief product officer, indices and benchmarks at Qontigo, commented: “Biodiversity is one of the paramount themes of our age and calls for investors to understand and address its associated risks in their investment portfolios.
“This launch comes as global investors are urged by some to account for and price nature into their sustainable investment strategies.”
Lorraine Kelly, global head of investment stewardship at ISS, added: “Investor focus on managing biodiversity impact has the potential to become as significant and enduring as the current focus on climate change.”
Qontigo and ISS’s new range follows the firms’ parent company Deutsche Boerse announcing plans to merge the two into a business offering ESG data, index and analytics following its acquisition of Danish software company SimCorp.