S&P Dow Jones Indices (SPDJI) has debuted an Environmental, Social and Governance (ESG) version of its famous S&P 500 Index. This is the first index launched of SPDJI’s global family of ESG indices across America, EMEA and Asia-Pacific.
In tandem with the launch of its S&P 500 ESG index, SPDJI has partnered with RobecoSAM for its new ESG scoring methodology. RobecoSAM specialised in providing ESG data, rating and benchmarking.
SPDJI excludes any company which falls in the worst 25% of ESG scores from each global industry group as well as any company which doesn’t have an ESG score due to unavailable data. This includes eliminating any company within tobacco and controversial weapons industry whilst targeting 75% of the traditional S&P 500’s market cap.
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The worlds largest ETF, SPDR S&P 500 ETF, has $270bn in assets under management and tracks the original S&P 500 index. SPDJI says it hopes the new ESG index not only serves as a performance tracking tool but as a benchmark for new ESG index-based investment vehicles such as ETFs.
In Europe, UBS Asset Management has already completed a licensing agreement with SPDJI to use the S&P 500 ESG Index as a benchmark for an ETF it plans to launch later this week.
Alex Matturri, Chief Executive Officer at S&P Dow Jones Indices, said in a statement: "We are excited to bring to market these innovative ESG indices and scores. S&P Dow Jones Indices pioneered ESG indexing over 20 years ago with the 1999 launch of the Dow Jones Sustainability World Index, the first global sustainability benchmark.
“Our philosophy as an independent index provider is to offer choice to investors. We will continue to contribute to the growth of sustainable finance and economies through our indices.”