ESG investing has gained popularity among institutional investors, with environmental concerns being the most prominent under the ESG criteria. Yet, despite significant attention and investment in recent decades, global greenhouse gas emissions are still on the rise.
US$9.2 trillion of annual spending on physical assets for energy and land-use systems by 2050 is required to reach Net Zero according to McKinsey 2022 estimates. This has led investors to rethink their investment strategy around Climate and to explore new solutions targeting transition finance which is inclusive and broad based.
Key Features of MSCI Climate Action Index Futures
- Suited for investors focused on Transition Finance & facilitates climate engagement with companies
- Sector Diversified
- Identifies leading companies in each sector
- Supports key principles for Net-Zero-Aligned benchmarks NZAOA
- “Bottom-up” approach company assessment rather than index optimisation
- Include Energy companies navigating the transition
- Company assessment includes Forward Looking metrics
- Potential increased weights of companies with Science Based approved Targets or ‘Credible Track Record’ (https://sciencebasedtargets.org/)
The SGX MSCI Climate Action Indexes contract provides investors with a tool to access a free float-adjusted, market capitalization-weighted index published by MSCI of companies that have been assessed to lead their sector peers in terms of four climate indicators – carbon intensity, emission reduction targets, green revenues and strength of climate risk management. The index futures contracts are available for trading ~22 hours a day across Asia, Europe and US hours.
MSCI Climate Action methodology has been developed to fill a gap within existing indexation methodologies for investors who aim to drive climate transition as well as decarbonization in the real economy through re-allocation of capital and engagement with corporates. The resulting indexes are sector diversified and adopt a bottom-up approach accompanied by forward-looking metrics while assessing companies. SGX Group has taken the lead and launched the first global suite of futures tracking MSCI Climate Action Indexes Net USD (World, Europe, USA, Japan and Asia Ex-Japan) to provide investors with efficient tools to access and manage their decarbonization objectives.
Read more : SGX MSCI Climate Action Indexes – Singapore Exchange (SGX)
