S&P Dow Jones Indices (DJI) launched a new environmental, social and governance (ESG) index, the S&P 500 ESG Index, based on its most widely used benchmark, the S&P 500.

It argues the index “dispels the myth of an ESG versus performance trade off.”

The index mirrors the risk and return profile of the S&P 500 Index, whilst achieving a 25% increase in ESG performance. The index launch was underpinned by a new ESG ranking system, the S&P DJI ESG Index Scores, which are calculated by Robeco’s Sustainable Asset Management (SAM).

Alex MatturriThe S&P DJI ESG Index Scores are used to target the top 75% of market capitalisation within each Global Industry Classified Standard (GICS) industry. This allows for a sector-neutral version of the benchmark with heightened ESG credentials without compromising other investment objectives, said S&P.

The index was the first of many launched by S&P this year, as it quickly followed this flagship ESG index with regional indexes and country-specific variants.

UBS Asset Management launched an exchange-traded fund (ETF) based on the S&P 500 ESG Index, under a licensing agreement with S&P, in March. The ETF has $122.8 million in assets under management (AUM), as of August.

“S&P DJI pioneered ESG indexing over 20 years ago with the 1999 launch of the Dow Jones Sustainability World Index, the first global sustainability benchmark. We will continue to contribute to the growth of sustainable finance and economies through our indices,” said Alex Matturri, CEO at S&P DJI.