Bloomberg has introduced the Bloomberg Global Aggregate Green, Social, Sustainability Bond Indices, a new suite of ESG-tailored fixed income indices targeting bonds that have been issued to fund projects with direct environmental and social benefits.
The indices target bonds that have been issued to fund projects with direct environmental and social benefits.
The indices are constructed from the Bloomberg Global Aggregate Index universe, a flagship measure of global investment-grade debt from 28 local currency markets. This multi-currency parent index includes Treasury, government-related, corporate, and securitized fixed-rate bonds from both developed and emerging markets issuers.
The methodology harnesses the capabilities of Bloomberg’s Sustainable Finance Group to determine whether bonds in the universe are aligned with the International Capital Market Association’s green, social, and sustainability bond principles.
Specifically, eligible bonds must clearly outline that their proceeds will be entirely designated for market-accepted green or social activities; the bond’s issuer must outline the decision-making process it follows to determine the eligibility of green or social projects; the bond’s proceeds should be tracked by the issuer and attested to by a formal internal process; and the issuer should file at least annual reports confirming the project’s ongoing compliance with green and social principles.
The suite includes a diverse range of sub-indices based on targeted duration, credit quality, or specific bond sector exposures. The indices may be further customized by specific ESG-related exclusions or regulatory “aware” fields such as SFDR and EU Taxonomy inputs.
Constituents in the indices are typically weighted by market value outstanding, although alternative weighting processes such as ESG-tilted or GDP-weighted are available on request.
The indices may be used as performance benchmarks for socially responsible fixed income portfolios or may serve as the basis for new investment products such as ETFs.
Jonathan Gardiner, Sustainable Indices Product Manager at Bloomberg Indices, said: “We endeavor to capture both short and long-term market trends with our sustainable index offerings and sustainable debt is swiftly growing, with global sustainable debt issuance surpassing $1 trillion year-to-date. Our new Global Aggregate Green, Social & Sustainability Bond Indices incorporate the research of Bloomberg’s ESG and fixed income data teams to deliver a diverse set of indices to meet the varied needs of the investment community exploring this growing market.”