Euronext has launched an index that tracks the performance of French listed firms against new industry-agreed science-based targets (SBT) for reductions in greenhouse gas emissions and said it may look to launch a European index next.
Euronext said on Thursday it has launched an index called the CAC SBT 1.5 that includes only CAC listed firms that comply with the 1.5 degree reduction target specified under the Paris Agreement.
Fabrice Rahmouni, head of indices at Euronext, said the CAC SBT 1.5 index differs from existing emissions indices in that it draws on agreed scientific metrics from the SBT initiative.
He told Global Investor: “We think that we now have an approach that is based on science that makes sense specifically when you look at the impressive number of companies participating the SBT initiatives. Science-based targets provide a clearly-defined pathway for companies and financial institutions to reduce greenhouse gas (GHG) emissions, independently assessed and validated, as such we think we now have the golden certification that is available to everyone.”
Rahmouni said the SBT initiative is currently voluntary and firms showing leadership in their efforts to reduce their carbon emissions deserve to be supported with their own index.
Euronext said that Amundi has already committed to launch an exchange-traded fund (ETF) based on the new emissions index, emulating the French asset manager’s earlier support, with BNP Paribas, of the Euronext CAC 40 ESG index launched in 2021.
Rahmouni said the exchange is already looking at the next product referencing the science-based target methodology.
He said: “Based on the client discussions, the next natural move would be a Eurozone approach. The number of companies onboarded into the initiative is growing fast. We think that we are well equipped to create in the future a Eurozone SBTI index approach.”
The SBT 1.5 variant index is the latest from the European exchange group.
Euronext launched the CAC 40 ESG index in March 2021 which was licensed last that year by Amundi as the basis for an ETF.
The European exchange group also launched in May 2022 the AEX ESG index which references firms listed on Euronext’s Amsterdam-based exchange.
Rahmouni said he expects investments into products based on the new index to come from a variety of sources.
“The universe of the CAC 40 ESG and the CAC SBT 1.5 are different so we would expect some new flows into the CAC SBT from the historical CAC 40 itself, new needs for ESG exposure or existing climate indices based on ESG scores because the SBT offers a more innovative approach.
He added: “As a reminder, only one year after the launch of the CAC 40 ESG in early 2020, we saw the migration of 25% of AUM from the CAC 40 to the CAC 40 ESG.”
Found this useful?
Take a complimentary trial of the FOW Marketing Intelligence Platform – the comprehensive source of news and analysis across the buy- and sell- side.
Gain access to:
- A single source of in-depth news, insight and analysis across Asset Management, Securities Finance, Custody, Fund Services and Derivatives
- Our interactive database, optimized to enable you to summarise data and build graphs outlining market activity
- Exclusive whitepapers, supplements and industry analysis curated and published by Futures & Options World
- Breaking news, daily and weekly alerts on the markets most relevant to you