German index provider Solactive has unveiled a new family of sustainability-themed equity indices that only include companies that meet robust ESG (environmental, social, and governance) standards.
The new index series provides exposure to firms considered best-of-breed in terms of ESG performance.
The Solactive ISS ESG Prime Index Series has been launched with indices covering global, developed, emerging, US, and European equity markets.
Customized extensions to the series focused on specific countries, regions, or sectors can be added upon request.
Each index is constructed from Solactive’s Global Benchmark Series which covers around 2,000 equity indices across developed and emerging markets.
The methodology draws upon research from ISS ESG, the responsible-investment arm of Institutional Shareholder Services (ISS) to include only those companies that ISS categorizes as “Prime”.
According to ISS, Prime categorization indicates the firm exceeds a high standard of sector-specific performance requirements based on its ESG risk exposure and impact of its business model and value chain using an absolute best-in-class approach.
Solactive already offers an extensive range of ESG indices launched in June 2018 in partnership with Legal & General Investment Management (LGIM). The range consists of both equity and fixed income indices.
More recently, in February 2019, Solactive unveiled a suite of broad ESG indices that use artificial intelligence (AI) to help guide the ESG selection process.
Timo Pfeiffer, Head of Research at Solactive, commented, “After launching our first set of broad, exclusion-based ESG-benchmarks in February, we are now pleased to extend our range and offer clients yet another alternative in that space, this time focusing on the ‘best of the best’ in terms of overall ESG performance by combining exclusions with a rigorous, absolute best-in-class approach.”
According to Solactive, the ISS ESG Prime Index Series is available for licensing and can be used as the foundation for investment products such as ETFs.