STOXX Ltd., the operator of Deutsche Boerse Group’s index business and a global provider of innovative and tradable index concepts, has announced that it has launched the STOXX® Europe 600 ESG-X Index. The index was developed based on feedback of asset owners, in order to accommodate their need for a version of Europe’s key benchmark that is in line with the exclusion criteria of their responsible-investing policy.
The STOXX Europe 600 ESG-X includes a product involvement screening for controversial weapons, tobacco and thermal coal as well as a norm-based screening that follows the United Nations Global Compact principles of human and labor rights, the environment, business ethics and anti-corruption. STOXX cooperates with the ESG data provider Sustainalytics for the screening.
Sustainalytics’s screens for UN Global Compact, controversial weapons and tobacco have been used by our institutional clients for many years,” said Shila Wattamwar, Director of Index Partnerships at Sustainalytics. “However, we are seeing increasing demand for our screens on thermal coal mining and the generating capacity of coal-fired power plants as investors look more closely at their climate-related risks.
In the past, exclusions have been applied via customized indices. Discussions with market participants showed a strong interest from asset owners for liquid, low-cost benchmarks with standardized exclusions aligned with their responsible-investing policy,” commented Inderpal Gujral, STOXX’s Head of Product. “The ESG-X version of STOXX Europe 600 uses free-float market cap weighting similar to Europe’s most traded benchmark index. It is easy to implement as benchmark for asset owners and well-suited to serve as an underlying for ETFs, derivatives or structured products.
The STOXX Europe 600 ESG-X Index shows a risk-return profile similar to its parent index and offers investors a European benchmark with exclusion criteria that are aligned with the responsible investment policies of leading asset owners.