S&P Dow Jones Indices Launches Net Zero 2050 Paris-Aligned Climate Bond Index

Published on: 28 September 2022
by KnowESG
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S&P Dow Jones Indices, the world’s leading index provider, announced the launch of the iBoxx EUR Corporates Net Zero 2050 Paris-Aligned ESG index.

This climate-focused bond index expands S&P DJI's Paris-Aligned and Climate Transition (S&P PACT™) indexing capabilities and adds to its growing line-up of global iBoxx fixed income indices. The iBoxx family of indices is now part of S&P DJI following the completion of S&P Global's merger with IHS Markit earlier this year.

The new iBoxx EUR Corporates Net Zero 2050 Paris-Aligned ESG index measures the performance of eligible investment grade corporate bonds which are selected and weighted from its parent iBoxx EUR Corporates index, taking into account environmental, social and governance (ESG) elements.

This climate-focused index aims to meet and exceed the standards for the European Union's Paris-Aligned Benchmarks (EU PABs) while incorporating factors to address transition risk and climate change opportunities which are aligned with the recommendations of the Financial Stability Boards' Task Force on Climate-related Financial Disclosures (TCFD). In addition, the index optimizes fixed income-related risks and returns to closely track the performance of its parent benchmark.

Smadar Shulman, EMEA Head of Fixed Income Indices at S&P DJI, said: 

"S&P Dow Jones Indices is proud to offer a wider range of indexing choices from equities to fixed income to help our customers and other market participants measure and mitigate climate and environmental-related risks. As an independent index provider, our goal is to provide the market with end-to-end multi-asset benchmarking solutions that help facilitate and contribute to long-term sustainability as corporations and institutions transition and strive towards a low-carbon future."

The iBoxx EUR Corporates Net Zero 2050 Paris-Aligned ESG index constituents are selected and weighted to be collectively compatible with a 1.5ºC global warming climate scenario at the index level. The index screens and excludes constituents that are involved in specific business activities, have violations against the principles of the United Nations Global Compact (UNGC) and involved in ESG controversies.

Similar to S&P DJI's existing S&P PACT Indices, the iBoxx EUR Corporates Net Zero 2050 Paris-Aligned ESG index utilizes multiple ESG data sources, including rich proprietary datasets and analytics from Trucost, part of S&P Global.

Since 2020, S&P DJI has launched different variations of its equity S&P PACT indices to meet customers' diverse needs. In the coming months, the index provider plans to launch additional fixed income S&P PACT indices, including those that reflect different currencies.

Source: S&P Dow Jones 

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