9th April 2019
S&P Dow Jones Indices has announced the launch of an environmental, social and governance version of its S&P 500 index to meet increasing investor demand for sustainable-investment vehicles based on U.S. equities.
The S&P 500 ESG Index will replicate the risk and return of the S&P 500—the marketcap-weighted index of the 500-largest publicly traded companies in the U.S.—while integrating environmental, social and governance criteria.
The index will target 75% of the traditional S&P 500’s market capitalization at the industry level based on the Global Industry Classification Standard.
The index will exclude tobacco, makers of certain weapons and companies with a low score in relation to the United Nations Global Compact principles for responsible businesses. S&P will use data from Arabesque S-Ray to screen out ineligible companies.
S&P Dow Jones Indices said the new S&P 500 ESG index will serve as a performance tracking tool and a building block for new ESG index-based investment vehicles and passive investing solutions, such as exchange-traded funds.
In the coming months the company plans to launch more ESG indices based on other regional and country-specific large and midcap benchmarks used in the Americas, Europe, Middle East and Africa and Asia-Pacific