Climate index provider of the year: FTSE Russell
In early 2020 FTSE Russell, along with the Church of England Pensions Board (CEPB) and Transition Pathway Initiative (TPI), launched the FTSE TPI Climate Transition Index. The index incorporates the objectives of the Paris Agreement and offers investors the chance to align their broad equity portfolios with companies based on their forward-looking commitments to a carbon emission pathway in keeping with a less than 2°C increase in average global temperatures. Since its launch customised versions of the index are being developed.
"Investors are critical agents of change in the climate transition, possessing enormous power to encourage timely and economically efficient decarbonisation by the portfolio companies. Our unique collaboration with TPI and the CEPB plays an important role in this process, through the creation of indexes to support investors seeking greater alignment to the objectives of the Paris Agreement," said Sylvain Château, head of sustainable investment product management, LSEG (owner of FTSE Russell).
This was quickly followed by the launch of two new versions of the FTSE World Government Bond Index (WGBI) and Economic and Monetary Union (EMU) Government Bond Index (EGBI). These versions incorporate increased tilting to climate risk considerations to allow investors to assess its economic impact on their fixed-income portfolios.
"Various options covering different asset classes gives investors choice to more accurately benchmark their portfolios," commented one Environmental Finance Sustainable Investment Awards judge. While another noted the indexes provided a "strong link to client needs and benchmarks".
FTSE Russell, working with HSBC Global Asset Management (HSBC GAM), created bespoke climate indexes that have been having a real-world impact as HSBC GAM launched a complementary suite of regional and country exchange traded funds (ETFs), tracking indexes from the FTSE ESG Low Carbon Select series. Two FTSE Russell climate risk-adjusted government bond indexes were chosen by BlackRock for the basis of its new climate risk-adjusted government bond ETFs.