FTSE Russell has unveiled two indices designed to assist investors in fulfilling their climate commitments and enhancing sustainability within their investment strategies.
According to ESG Today, the newly launched products, the FTSE Fixed Income TPI Climate Transition Index Series and the FTSE Fixed Income TPI Focused Glidepath Index Series, are crafted to support the financial community’s transition towards a low-carbon economy. These indices aim to bridge the gap between current investment practices and the climate goals set forth in the Paris Agreement by 2050.
FTSE Russell specialises in creating and managing a broad range of indexes and data solutions that span across various asset classes and geographies. This launch marks a significant enhancement to their fixed income offerings, traditionally known for robust performance measurement and benchmarking tools.
The FTSE Fixed Income TPI Climate Transition Index Series offers a dynamic approach by integrating a fixed-tilt framework to adjust constituent weights. This adjustment is based on several critical climate factors including carbon emissions, green revenues, green bonds, TPI’s Management Quality scores, and TPI’s Carbon Performance scores. These factors are instrumental in reflecting the performance of global and regional fixed income markets, whilst navigating the risks and opportunities of a low-carbon transition.
Conversely, the FTSE Fixed Income TPI Focused Glidepath Index Series employs a long-only investment strategy focused on corporate bonds. It innovatively directs capital from matured bonds towards companies aligned with achieving the stipulations of the Paris Agreement by mid-century. This method is designed to minimize tracking errors and strategically funnel investments into sectors and companies actively facilitating the transition to a greener economy.
These indices not only aim to mitigate carbon risk and capture green revenues but also incorporate forward-looking climate metrics, providing a robust tool for investors committed to sustainable growth and adherence to global climate goals.
“FTSE Russell climate indices have evolved to meet the increasing sophistication of sustainable investors,” FTSE Russell Head of Fixed Income, Currencies, and Commodities Scott Harman said. “We have seen growing demand for indices that integrate company activity within the green economy and leverage forward-looking metrics.”
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