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Euronext and Vigeo Eiris today launched the CAC 40® Governance Index, a thematic index that rates companies in the Paris market’s benchmark CAC 40 index on their corporate governance performance.
The CAC 40® Governance Index takes the constituent stocks of the CAC 40 index and weights the components based on their corporate governance score, using Equitics® methodology developed by Vigeo Eiris.
Equitics® is based on 45 indicators that address the following four criteria:
- Responsible board practice and organisation: effectiveness, balance of power, integration of social responsibility factors
- Audit and internal controls: independence of specialised committees and review of CSR risks
- Shareholders’ rights: fair treatment and protection of minorities
- Responsible executive remuneration.
CAC 40® component stocks are classified in four groups of ten, based on their scores, and assigned a corresponding weight in the index:
- the ten top-rated companies are assigned a total weight of 40%
- the next ten are assigned a weight of 30%
- the ten following companies are assigned a weight of 20%
- the final ten are assigned a weight of 10%.
The index is calculated and disseminated like the CAC 40, except that stocks’ weighting is based not on market capitalisation but on their corporate governance performance score. This score is assigned using a questionnaire that rates the integration of social responsibility and sustainability in their processes for decision-making, control and management assessment. Index composition and weighting are reviewed quarterly, like the CAC 40 Index.
The index shows that CAC 40 companies demonstrate robust performances in responsible corporate governance. Environment, Social and Governance (ESG) factors are well integrated, particularly in terms of respect for shareholders’ rights and audit and internal controls. The main area of vulnerability and axis for improvement is responsible executive remuneration, in particular the independence of remuneration committees, transparency on remuneration levels, and integration of objectives for mitigating CSR-related risks based on performance and progress indicators in short and long-term incentive plans.
Fouad Benseddik, Director of Methods and Institutional Relations at Vigeo Eiris,said:
We are delighted to be continuing our longstanding partnership with Euronext with this new thematic index. And we are convinced that this new index, which responds to strong market demand, will lead to even better recognition of the companies that rely on the most responsible governance systems.
In socially responsible investment, extra-financial rating is considered a good indicator of company solidity and CSR performance. We teamed up with Vigeo Eiris to design the first corporate governance index based on the CAC 40, to demonstrate that aligning company interests with those of its stakeholders can create long-term value,” added Anthony Attia, CEO of Euronext Paris and Global Head of Listing.