A biodiversity index suite has been released on Monday in an effort to help investors align their portfolios with their biodiversity impact reduction and sustainable development goals (SDGs) by screening for companies with low impact.
The ISS STOXX biodiversity index suite was jointly introduced by Deutsche Borse-controlled ISS ESG and analytics firm Qontigo, the companies said in a statement.
All indices in the suite exclude companies involved in activities assessed to be causing significant harm to biodiversity or reducing the biodiversity footprint while targeting an aggregate reduction in carbon intensity of at least 30% across the included constituents.
One “leaders’” index consists solely of companies deriving at least 20% of their revenues from activities deemed to make a positive net contribution to the SDGs, including the preservation of marine ecosystems and sustainable agriculture and forestry.
“This launch comes as global investors are urged by some to account for and price nature into their sustainable investment strategies, and we are confident that the unique combination of our high-quality STOXX index suite, together with ISS ESG’s rigorous data sets, will prove valuable in enabling investors to align with their biodiversity objectives,” said Axel Lomholt, chief product officer for Indices & Benchmarks at STOXX.
Each new index family uses a granular index construction methodology, built on ISS ESG’s datasets and a three-part framework to select index constituents based upon an avoid, minimise, and enable approach:
- avoid companies involved in activities causing harm to biodiversity
- minimise exposure to companies with negative impacts on biodiversity
- and capture companies enabling positive impact on biodiversity through scoring high on biodiversity solutions
The framework goes beyond simple exclusion criteria, positively screening for companies with low negative impact on biodiversity and those companies actively enabling the planet’s biodiversity – in line with COP15 goals.
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