S&P Dow Jones Launches Paris-Aligned Climate Transition Indices

EM Staff

Two new indices will assess corporate performance against the minimum standards established in the European Union over the past year.

21 April 2020 | S&P Dow Jones Indices (“S&P DJI”) this week launched the S&P Eurozone LargeMidCap Paris-Aligned Climate Index and the S&P Eurozone LargeMidCap Climate Transition Index.

The new S&P Paris-Aligned & Climate Transition (PACT) Indices have been designed with a holistic approach to incorporate a broad range of climate and sustainability-based objectives. These include the climate objectives and minimum standards for the European Union (EU) Paris-Aligned Benchmark (PAB) and EU Climate Transition Benchmark (CTB) as specified by the EU Sustainable Finance Technical Expert Group (TEG) in its September 2019 Final Report on Climate Benchmarks and Benchmarks’ ESG Disclosure.

The EU created the PAB and CTB classifications and standards not only to fulfill risk reduction goals but also to create opportunities that will emerge as European economies transition to a low-carbon, climate resilient and more resource efficient one. In addition, the indices incorporate the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures’ (TCFD) recommendations for assessing climate-related risks, opportunities and financial impacts.

“There is a growing urgency in Europe and globally to identify solutions that address the negative consequences companies and institutions face due to climate change. The PACT Indices provide transparency with respect to these consequences and investment strategies that address climate change risks and opportunities,” said Reid Steadman, Global Head of ESG Indices at S&P Dow Jones Indices.

The PACT Indices utilize rich proprietary datasets and analytics from Trucost, part of S&P Global. The indices measure the performance of eligible equity securities from the S&P Eurozone LargeMidCap Index, selected and weighted to be collectively compatible with a 1.5°C global warming climate scenario and to meet several other climate-focused objectives. The indices are developed to help investors and other market participants align their investments and manage climate-related risks and opportunities.

In the coming months, S&P DJI plans to launch additional Paris-Aligned and Climate Transition indices based on its other widely tracked regional and country-specific indices used in Europe, the U.S. and developed markets.

The research and methodology on the S&P Paris-Aligned & Climate Transition (PACT) Indices are available at www.spdji.com.

Compiled from press releases

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