Bloomberg and MSCI have partnered together to launch a series of environmental, social and governance (ESG) fixed income indices designed for the Canadian market.
BlackRock is among the first clients to license the indices for a suite of Canadian ESG ETFs.
Co-branded as the Bloomberg Barclays MSCI Canada ESG Indices, the range is built from existing Bloomberg Barclays indices that cover the investment grade aggregate and corporate bond markets.
The suite utilizes data from MSCI ESG Research to design indices along one of four ESG investment methodologies – Socially Responsible (SRI), Sustainable, ESG-weighted, or Green Bond.
The Bloomberg Barclays MSCI Socially Responsible (SRI) Indices excludes issuers that are involved in business activities in conflict with ESG policies, values, or social norms.
The Bloomberg Barclays MSCI Sustainability Indices apply a positive screen to include only best-in-class issuers who successfully manage their ESG risks relative to industry peers.
The Bloomberg Barclays MSCI ESG-Weighted Indices use MSCI ESG ratings as well as the momentum of those ratings (change in rating level over the last 12 months) to re-weight issuers in favour of those with higher ratings and greater rating momentum.
Lastly, the Bloomberg Barclays MSCI Green Bond Indices offer investors access to global green bond issuance. Green bonds are fixed income securities issued to fund projects with direct environmental benefits, and are classified by their designated use-of-proceeds.
“As the inclusion of ESG principles in North American investment strategies continues to grow, we are delighted to expand our ESG index suite with new indices specifically designed to support Canadian investors,” said Chris Hackel, Index Product Manager, Bloomberg. “MSCI has been a great partner as Bloomberg evolves our index solutions to meet the needs of institutional investors around the world.”
“In recent years, we have seen increased interest from the Canadian institutional market in incorporating ESG principles into their investment processes,” added Eric Moen, Head of ESG Products for MSCI ESG Research. “We are pleased to be partnering with Bloomberg to launch these new indices and provide fixed income investors with the tools and transparency they need to effectively benchmark to ESG investment performance.”
BlackRock is among the first clients to license the indices which have been used for a suite of Canadian ESG ETFs that began trading at the end of March 2019.
“Clients are increasingly looking to pursue a more sustainable approach to achieving their investment goals,” said Pat Chiefalo, Managing Director, Head of iShares, BlackRock Canada. “We are thrilled to work with Bloomberg and MSCI to grow the ESG fixed income category and further enhance the offering for Canadian investors.”