Solactive aids Investors to make climate conscious decisions by releasing its Climate Transition and Paris-Aligned Benchmark Indices
The Paris Climate agreement is regarded as one of the most important contemporary international conventions. Its main goal is to keep the increase of global average temperature below a critical threshold of 2°C. While the Paris agreement puts the responsibility to meet the desired targets into politician’s hands, investors seek to make a difference with their investment decisions, too.
The Solactive ISS ESG Provisional Paris-Aligned Benchmark Indices (PAB) provide exposure to a portfolio that, based on ISS ESG climate analysis, is in line with a 2°C scenario through 2050 allowing investors to be at the forefront of an immediate transition towards the Paris Agreement’s goals. Complementing the release, the Solactive ISS ESG Provisional Climate Transition Benchmark Indices (CTB) represent a baseline climate-aware allocation that is set up to project the path towards a low-carbon economy.
“Our two new index frameworks allow investors to proactively address climate change-related risks in their asset allocation,” comments Timo Pfeiffer, Chief Markets Officer at Solactive. “We are very proud to deliver an index series, which gives investors potentially a holistic and reasoned strategy to tilt their portfolios towards a greener future.”
Starting from a set of baseline exclusions of controversial weapons and international norms violators, the Solactive ISS ESG Provisional Climate Transition Indices feature a 30% reduction in carbon intensity versus their respective benchmark while the Solactive ISS ESG Provisional Paris-Aligned Benchmark Indices take a more severe approach with a 50% reduction as well as additional activity-based exclusions. Furthermore, both index-series incorporate an ongoing year-on-year self-decarbonization of at least 7%. The index methodology is designed to meet the criteria of the EU Technical Expert Group on Sustainable Finance’s (TEG) Final Report on Climate Benchmarks and Benchmarks’ ESG Disclosures. The Index names contain the affix “Provisional” to reflect the adaptive potential that lies in the transformation of the TEG’s recommendations into delegated acts.
Initially covering two regions (Europe and Developed Markets), indices of the series may serve as the underlying for passive investment strategies or as a performance benchmark of GHG emission-related strategies as well as a policy benchmark to help guide strategic asset allocation.