Hong-Kong based index provider Hang Seng Indexes has launched its first indices that are built using environmental, social, and governance (ESG) considerations.

The indices are the first benchmarks from Hang Seng to include ESG considerations within their construction.

The HSI ESG Index and HSCEI ESG Index are socially responsible versions of two of the firm’s most widely recognized benchmarks – the Hang Seng Index and Hang Seng China Enterprises Index.

The Hang Seng Index is the leading barometer for the health of the Hong Kong stock market. It consists of the 50 largest companies listed on Hong Kong stock exchange.

The Hang Seng China Enterprises Index provides exposure to 50 Chinese large-cap companies listed in Hong Kong.  The securities are split between 40 H-shares and a total of 10 Red-chips and P-chips. These share classes differ with respect to where companies are incorporated.

H-shares are shares in companies incorporated in mainland China, while Red-chip and P-chip companies are both formed outside mainland China. P-chip companies are incorporated specifically in the Cayman Islands, Bermuda, and the British Virgin Islands, and are private sector businesses operating in mainland China.

Both indices are weighted by free float-adjusted market capitalization.

The new indices contain the same list of stocks as their original benchmarks but weight their constituents by ESG scores provided by Hong Kong Quality Assurance Agency (HKQAA), an independent and professional assessment body. The assessment includes an examination of core ESG performance indicators.

Vincent Kwan, Chief Executive Officer, Hang Seng Indexes, commented, “ESG investing is continuing to gain momentum in markets around the world. Our new HSI ESG Index and HSCEI ESG Index provide bases for product issuers to develop investment products linked to the portfolios of our flagship indexes but with a greater emphasis on ESG.”