STOXX Ltd., the operator of Deutsche Boerse Group’s index business, and a global provider of innovative and tradable index concepts, announced recently that the newly launched STOXX Europe Industry Neutral ESG and STOXX North America Industry Neutral ESG 150 indices have been licensed to Stichting Algemeen Pensioenfonds Unilever Nederland – Kring ‘Progress’ (‘Progress’) to be used as benchmarks.
The STOXX Regional Industry Neutral ESG Indices are tilted towards companies that perform superior with respect to a set of selected environmental, social, and governance (ESG) criteria. They are based on a transparent rating model provided by Sustainalytics, a leading global provider of ESG research and analysis.
“We are delighted to work with ‘Progress’, a pension fund which believes in the importance of integrating ESG factors in the investment decision-making process. The licensing of the STOXX Industry Neutral ESG Indices as benchmarks confirms that sustainable investing is gaining momentum as an integral part of portfolio construction,” said Matteo Andreetto, chief executive officer, STOXX Limited. “These indices are innovative and unique solutions that measure performance with regard to ESG criteria, and specifically exclude UN Global Compact violations and controversial weapons. Based on a best-in-class selection method, they offer targeted access to the ESG theme and an industry neutral weighting.”
Michael Kaal, chief risk officer at ‘Progress’ said: “We are conscious of our social responsibility as an institutional investor and seek to act accordingly. This means that Progress in its investment policy reflects the norms and values of society, and thus takes into account in its investment decisions relevant environmental, social and corporate governance considerations, according to international standards. In delivering its social responsibility, the fund takes account of the interests of its members, pensioners and employers and seeks to be accountable to them for the decisions it makes and the actions taken.”
The universe for the STOXX Regional Industry Neutral ESG Indices is the STOXX Global 1800 Index. STOXX will exclude the companies that Sustainalytics considers to be non-compliant with the UN Global Compact Principles as well as companies identified to be involved with controversial weapons such as anti-personnel landmines, cluster weapons, or chemical, biological and nuclear weapons. Regional Industry Neutral ESG indices for Europe and North America are created by selecting companies with an ESG score of greater than or equal to 50 for each of the ESG criteria as provided by Sustainalytics. All companies fulfilling the requirements are selected. Companies without a rating will not be included in the indices. Additionally, the STOXX North America Industry Neutral Index 150 selects the 150 companies with the highest Total Rating Score.
The indices are weighted by free-float market cap combined with a cap factor, so that the ICB Industry weight of the index is similar to the ICB Industry weight of the benchmark.