ISS ESG, Qontigo to Reduce Biodiversity Impact
ISS ESG, the sustainable investment division of Institutional Shareholder Services Inc. (ISS), and Qontigo, a renowned global provider of cutting-edge index, analytics, and risk solutions, have joined forces to unveil the highly anticipated ISS STOXX Biodiversity Index Suite on the occasion of the U.N.'s International Day for Biological Diversity.
The newly launched index suite allows interested clients to align their portfolios with their biodiversity impact reduction objectives. All indices within the suite exclude companies involved in activities deemed to significantly harm biodiversity or reduce the biodiversity footprint.
Furthermore, they bolster alignment with the U.N. Sustainable Development Goals (SDGs) focused on biodiversity, including life below water and life on land. Simultaneously, the index methodology targets an overall reduction in carbon intensity of at least 30 per cent across the included constituents.
In addition to the core index family, the suite encompasses a Biodiversity Leaders family, comprised exclusively of companies generating a minimum of 20 per cent of their revenues through activities that make a positive net contribution to the SDGs. These activities encompass the preservation of marine ecosystems, sustainable agriculture, and forestry.
Axel Lomholt, Chief Product Officer for Indices & Benchmarks at STOXX, expressed the significance of biodiversity as a critical theme in our era, emphasising the need for investors to comprehend and tackle the risks associated with it in their investment portfolios.
Against the backdrop of growing calls for global investors to consider and incorporate the value of nature into their sustainable investment approaches, the launch of the ISS STOXX Biodiversity Index Suite is poised to play a crucial role. Lomholt expressed confidence that the synergistic blend of STOXX's high-quality index suite and ISS ESG's meticulous data sets will prove invaluable in empowering investors to align their investment strategies with their biodiversity objectives.
Each of the newly introduced index families adopts a meticulous index construction methodology, leveraging ISS ESG's comprehensive datasets and a three-part framework to determine index constituents.
This framework follows an "avoid, minimise, and enable" approach: it excludes companies engaged in activities that harm biodiversity, reduces exposure to companies with negative impacts on biodiversity, and includes companies that actively contribute to positive biodiversity outcomes by scoring high on biodiversity solutions.
Importantly, this framework surpasses mere exclusion criteria and actively identifies companies with a minimal negative impact on biodiversity while emphasising those actively facilitating the preservation of the planet's biodiversity, aligning with the goals outlined in COP15.
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