Solactive licences Sustainable Development Goals Index to BNP Paribas
Solactive has licensed its newly-launched Solactive Sustainable Development Goals World Index, which enables investors to gain exposure to companies that have been identified as making a significant contribution to the advancement of the United Nations’ Sustainable Development Goals (SDGs), to BNP Paribas.
The bank plans to issue structured products tied to the indices later this year.
The United Nations’ Sustainable Development Goals are a set of 17 goals established to guide international cooperation to achieve sustainable development, end poverty and tackle climate change. They were adopted by UN member countries in September 2015 and require active participation from governments, corporations and investors.
The Solactive Sustainable Development Goals World Index consists of 50 equally-weighted companies which have a clear, positive net impact on sustainable development. Eligibility for inclusion is determined based on Vigeo Eiris’ Equitics methodology which maps the SDGs against the companies’ products, services and behaviours. Companies for whom sustainable products such as renewable energy or essential medicines represent a significant proportion of activity are eligible. Each company is rated with regard to their impact on people, the planet and their business practices.
Additional levels of filtering are embedded into the process: a carbon footprint exclusion filter is applied based on the companies’ carbon emissions and energy transition strategies. Companies involved in disputable industries such as nuclear, tobacco or firearms are also left out. The same treatment is applied to companies which have been the subject of critical controversies such as human rights violations. The ESG screenings are then combined with a low volatility filter, while applying country and sector caps. The Index rules require the inclusion of stocks from Europe, Asia and America, thus making the Index global in scope.
Henning Kahre (pictured), head of research, Solactive, says: “We at Solactive see increasing demand for indices offering ESG compliant access to markets as a result of long-term initiatives such as UN’s SDGs. For the Solactive Sustainable Development Goals Index we combine our expertise in ESG focused index design with strong and experienced partners in the space, on the ESG research as well as on the product side. Furthermore, this new index series adds a Smart Beta layer on top of the initial universe of stocks, combining two of the most relevant themes in the indexing industry these days.”
Neven Graillat, head of sustainable investment solutions, BNP Paribas Global Markets, says: “The 2030 agenda for sustainable development is a transformative global framework for people, the planet and prosperity, and applies to each and every one of us over the next 15 years. Financial markets must support commercial innovations to deliver on the SDGs, and we believe that investors and corporations have a major role to play. This is the idea behind the Goal 17 Partnership for the goals. Sustainability is at the core of BNP Paribas’ strategy – we want to deliver long term solutions for our clients and do business which has a positive impact on society and the environment. So we are pleased to have licensed this unique set of indices which will enable investors to allocate their capital towards companies that are leading the way in terms of advancing the UN’s SDGs.”
Michael Notat, head of global markets at Vigeo Eiris, says: “This new SDGs index is a great means to invest in long term value creation through a precise selection of companies based on their business behaviour, the nature of their activities with regard to SDGs and their carbon strategy. It brings together a set of companies that are committing not only to sustainable growth in their products and services but as well in their way of doing business.”
The Solactive Sustainable Development Goals World Index is available in EUR and USD and is calculated as a Net Total Return Index. The Index is also available with a risk control (RC) feature, using a target volatility level of 8 per cent for the EUR version and 10 per cent for the USD index. The 50 components are equally-weighted as of the relevant selection day and the composition is adjusted annually.
The Solactive Sustainable Development Goals World Index is based on 100 at the close of trading on the start date (29 December 2000).