S&P Dow Jones Indices (SPDJI) has launched two indices with climate and sustainability-based objectives as part of a Paris-aligned and climate transition index range.

The S&P Eurozone LargeMidCap Paris-Aligned Climate index and the S&P Eurozone LargeMidCap Climate Transition index, which initially started as a concept, include the climate and sustainability-based objectives set out by the European Union (EU).

The indices comply with the EU Paris-Aligned Benchmark and the EU Climate Transition Benchmark, respectively, set out by the EU Sustainable Finance Technical Expert Group final report in 2019.

The two benchmarks set out by the EU are set to not only reduce climate change risks but also create opportunities for European economies that transition to low carbon emissions and become more resource-efficient.

The SPDJI's Paris-aligned and climate transition (PACT) indices incorporate datasets and analytics from Trucost, an environmental risk analytics company and subsidiary of SPDJI.

From their parent index, the S&P Eurozone LargeMidCap index, the indices select and weight companies that are compatible with a 1.5°C global warming climate scenario and meet several other climate-focused objectives.

SPDJI plans to expand its PACT indices range in the coming months with regional and county-specific indices used in Europe, the US and developed markets.

S&P Dow Jones Indices and IHS Markit partner to launch multi-asset indices

Reid Steadman, global head of ESG indices at SPDJI, said: “There is a growing urgency in Europe and globally to identify solutions that address the negative consequences companies and institutions face due to climate change.

“The PACT Indices provide transparency with respect to these consequences and investment strategies that address climate change risks and opportunities.”

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