Table 1 lists the full range of sustainability-related investment indices provided by WFE members, either directly or through subsidiaries. More detailed information is provided in Annex A. New product launches have increased significantly since 2007, as has the number of exchanges entering this field for the first time.
The early pioneers and current main players are the London Stock Exchange Group (via its 50 per cent ownership of FTSE), NASDAQ OMX and NYSE Euronext (see case study). The majority of new entrants are from developing markets such as South Africa, Brazil, Korea, Indonesia and India.
The very latest additions are the Shanghai Stock Exchange’s Social Responsibility Index (launched in August 2009) and an ESG Index being developed by the Egyptian Exchange in association with the Egyptian Institute of Directors and Standard & Poor’s (scheduled for launch in early 2010).
In general terms, developed market exchanges are focusing primarily on investable indices which can be licensed to tracker funds or customised to client’s specific requirements, whilst the agenda in emerging markets has usually begun with profile raising, investor confidence and changing corporate behaviour.
Until recently, all of these indices have tended to fall into one of two main categories:
- Broad-based indices of stocks from all industry sectors, using extensive ESG criteria and scoring systems to select companies that are “leaders” in social and environmental responsibility. Examples include the FTSE4Good series, the BM&FBOVESPA Corporate Sustainability Index (ISE), the Johannesburg Stock Exchange Socially Responsible Investment Index, the NASDAQ OMX GES Sustainability Nordic Index, and the Wiener Börse VÖNIX Sustainability Index.
- Sector-specific indices focusing specifically on companies that provide solutions to sustainability challenges, particularly in relation to clean technology, sustainable energy and environmental services. These are frequently linked to exchange-traded funds (ETFs).
Examples of the latter type of index product include FTSE’s Environmental Technology Index series, Deutsche Börse’s DAXglobal Alternative Energy Index, the NASDAQ OMX Clean Edge Global Wind Energy Index, and the NYSE Arca Cleantech Index. In addition, the International Securities Exchange (ISE) offers three proprietary cleantech indexes: the ISE Water Index, the ISE-CCM Green Energy Index and the ISE Global Wind Energy Index. ETFs based on the water index and the wind energy index are listed on NYSE Arca through a partnership between ISE and First Trust.
In the last year, NYSE Euronext has launched a third variation: a broad-based (non-sector specific) index oriented around a single ESG issue, in this case climate change. The NYSE Euronext Low Carbon 100 Europe® Index is an index weighted by free-float market capitalization designed to measure the performance of the 100 largest European companies having the lowest carbon (CO2) intensity in their respective sectors or homogeneous sub-sectors.
Indices are by no means the only sustainability-related information product that can be provided by exchanges. An interesting example is provided by the Luxembourg Stock Exchange (LuxSE), which has become a leading listing venue for microfinance investment vehicles (MIVs). A key LuxSE initiative to strengthen this market is the Luxembourg Fund Labelling Agency (LuxFLAG), an independent non-profit association created in 2006 by LuxSE and six other founding Charter Members including ALFI, the European Investment Fund, the Ministry of Foreign Affairs and the Ministry of Finance. The Agency aims to promote the raising of capital for microfinance by awarding a recognisable label to eligible MIVs. Its objective is to reassure investors that the MIV actually invests, directly or indirectly, in the microfinance sector.
| Exchange | Index | Launch year |
|---|---|---|
| BME | FTSE4Good IBEX Index | 2008 |
| BM&FBOVESPA | Corporate Sustainability Index (ISE) | 2005 |
| Deutsche Börse | DAXglobal® Alternative Energy Index | 2006 |
| DAXglobal® Sarasin Sustainability Germany Index | 2007 | |
| DAXglobal® Sarasin Sustainability Switzerland Index | 2007 | |
| The Egyptian Exchange | ESG index in development with S&P | 2010(a) |
| Indonesia Stock Exchange | SRI-KEHATI Index | 2009 |
| International Securities | ISE Water Index | 2000 |
| Exchange | ISE-CCM Green Energy Index | 2001 |
| ISE Global Wind Energy Index | 2005 | |
| Johannesburg Stock Exchange | JSE Socially Responsible Investment (SRI) Index | 2004 |
| Korea Exchange | Korean SRI Index (in development) | 2009(b) |
| London Stock Exchange Group | FTSE4Good Global Index | 2001 |
| (via joint ownership of FTSE) | FTSE4Good US Index | 2001 |
| FTSE4Good Europe Index | 2001 | |
| FTSE4Good UK Index | 2001 | |
| FTSE4Good Global Index 100 | 2001 | |
| FTSE4Good US 100 Index | 2001 | |
| FTSE4Good Europe 50 Index | 2001 | |
| FTSE4 Good UK 50 Index | 2001 | |
| FTSE4Good Japan Index | 2004 | |
| FTSE4Good Environmental Leaders Europe 40 Index | 2007 | |
| FTSE4Good Australia 30 Index | 2008 | |
| FTSE4Good IBEX Index | 2008 | |
| FTSE KLD Global Sustainability (GSI) Index Series | 2008 | |
| FTSE KLD Global Climate 100 Index | 2008 | |
| FTSE Environmental Technology Index Series | 2008 | |
| The FTSE Environmental Opportunities Index Series | 2008 | |
| NASDAQ OMX | NASDAQ Clean Edge US Index | 2006 |
| NASDAQ OMX Clean Edge Global Wind Energy Index | 2008 | |
| Wilder NASDAQ OMX Global Energy Efficient Transport Index | 2008 | |
| OMX GES Sustainability Nordic Index | 2008 | |
| OMX GES Ethical Nordic Index | 2008 | |
| OMX GES Ethical Denmark Index | 2008 | |
| OMX GES Ethical Finland Index | 2008 | |
| OMX GES Ethical Norway Index | 2008 | |
| OMX GES Ethical Sweden Index | 2008 | |
| OMX GES OMXS30 Ethical Index | 2008 | |
| OMX GES Sustainability Sweden Ethical Index | 2008 | |
| OMX GES Sustainability Sweden Index | 2008 | |
| National Stock Exchange of India | S&P ESG India Index | 2008 |
| NYSE Euronext | NYSE Arca Cleantech Index | 1999 |
| NYSE Arca Environmental Services Index | 2003 | |
| NYSE Arca WilderHill Clean Energy Index | 2004 | |
| NYSE Arca WilderHill Progressive Energy Index | 2006 | |
| Euronext FAS IAS Index | 2006 | |
| Low Carbon 100 Europe Index | 2008 | |
| Shanghai Stock Exchange | SSE Social Responsibility Index | 2009 |
| Tel-Aviv Stock Exchange | Maala SRI (Socially Responsible Investing) Index | 2005 |
| Wiener Börse | VÖNIX Sustainability Index | 2008 |
| CEE Responsible Investment Universe Index (CEERIUS®) | 2009 | |
| (a) Launch planned for Q1 2010 (b) Launch planned for Q3 2009 |
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