Lyxor Appoints Solactive Again for the Release of their Third Green Bond ETF, the Lyxor Euro Government Green Bond (DR) UCITS ETF
Climate change plays a significant role in our society for decades to come. Tackling rising temperatures is, therefore, not simply an environmental issue but also an economic necessity. According to the British non-profit Climate Bonds Initiative (CBI), financial professionals regard green bonds as one way to come to grips with climate change. In the first quarter of 2021, CBI reports the issuance of USD 106.86 billion in green bonds. In 2020, the global issuance of green bonds exceeded the $1 trillion mark[1]. Building on this positive development, Green Bond pioneer Lyxor now released its new Lyxor Euro Government Green Bond (DR) UCITS ETF tracking the Solactive Euro Government Green Bond Index.
Both the attractivity and importance of green bond investing are undeniable. Between 2015 and 2020, the amount of green bond investing grew by a steady 60% per year, and the World Economic Forum expects the sum of global green bonds to achieve USD 2.36 trillion by 2023[2]. The idea behind Green Bonds is to use the money raised through the issuances of Green Bonds for projects that positively affect the environment or contribute to the fight against climate change. Lyxor’s new Lyxor Euro Government Green Bond (DR) UCITS ETF cultivates on this development, and it enables investors to engage with green central government debt issued by single members of the Eurozone, which devotedly helps financing projects to fight climate change.
The Solactive Euro Government Green Bond Index serves as the underlying for the Lyxor Euro Government Green Bond (DR) UCITS ETF. The index is a rules-based, market value-weighted index engineered to mirror the performance of the European government (Eurozone countries) green bond market. The index is comprised of investment grade (IG) rated green bonds denominated in EUR and calculated as a Total Return Index denominated in EUR. The Solactive Euro Government Green Bond Index represents a comprehensive Green Bond universe, as the index only selects bonds that are defined as Green Bonds by the CBI. Furthermore, for a bond to be eligible for inclusion into the index universe, its amount outstanding must be at least EUR 300m and is required to hold a minimum time to maturity of at least one year. Additionally, Floating rate notes, bills, inflation-linked bonds, convertible bonds, US municipal bonds, ABS/MBS, and other structured securities are excluded from the index.
Timo Pfeiffer, Chief Markets Officer at Solactive, comments: “The popularity of green bonds has many sound reasons. First, investors are paying more attention to ESG- and climate-friendly investment solutions. Second, regulators around the globe are taking actions to increase transparency and to lead the way towards establishing commonly accepted standards for Green Bonds. Furthermore, regulators increasingly require investors to take sustainability considerations into account. All of these factors will increase the demand for Green Bonds and thus most likely support the performance of Green Bonds. We are very happy that Lyxor once again appoints Solactive as their index provider for their third green bond index with us, and we are looking forward to creating more climate-aware investment solutions with them going forward.”
[1] Source: CBI – https://www.climatebonds.net/2020/12/1trillion-mark-reached-global-cumulative-green-issuance-climate-bonds-data-intelligence
[2] Source: World Economic Forum – https://www.weforum.org/agenda/2020/11/what-is-green-finance/