Insurance group Zurich UK has switched almost $1bn assets to a new ESG index created in partnership with DWS and MSCI.
The MSCI USA ESG Universal Sector Neutral Select Capped index targets a 30% cut in carbon emissions relative to the MSCI USA.
The 629 companies included in the index are weighted based on a combination of MSCI’s ESG score and a company’s market cap with a higher allocation made to those with good and improving ESG profiles.
The index is also sector neutral meaning high carbon emitting industries have the same overall weighting.
The index fund will be managed by DWS while MSCI will calculate the underlying index.
David Thompson, CIO at Zurich UK, commented: “Climate change is one of the most pressing issues of our time and we are using our influence as a major global investor to help tackle the crisis.
“By reducing the financed carbon emissions from our portfolio and continuing to engage with companies, we aim to play our part in financing a more sustainable future.
“Weighting our investments towards companies that score highly on ESG principles can deliver both superior risk-adjusted returns for customers and more sustainable outcomes.”
Mark Guirey, head of EMEA insurance clients at MSCI, said: “MSCI ESG indices are designed to provide institutional investors with effective and transparent tools to integrate ESG and climate considerations in their investment portfolios and align their benchmarks with their objectives.”
Peter McGloughlin, head of Insurance UK and Ireland at DWS, added: “Our ESG advisory team was able to provide some real insight on our own experiences in creating tailored ESG and climate solutions that reflect investor’s objectives and the issues Zurich needed to consider.”