Nasdaq Nordic has unveiled the OMX Stockholm 30 ESG Responsible Index, an ESG-focused version of Sweden’s bellwether equity index.

The OMX Stockholm 30 Index consists of the 30 most traded securities on Nasdaq Stockholm.

The ESG index is based on the OMX Stockholm 30, which consists of the 30 most traded securities on Nasdaq Stockholm.

The index follows a systematic rules-based screening process driven by data provided by ISS-Ethix, the ESG analytics division of Institutional Shareholder Services.

Firms involved in cluster munitions, anti-personnel mines, and nuclear, biological and chemical weapons are automatically excluded, as are those failing to adhere to international norms on environmental protection, human rights, labour standards, and anti‐corruption.

Companies deriving at least 5% of revenues from operations involving alcohol, tobacco, military equipment, pornography, and gambling are also stripped out, as are firms deriving 50% or more of revenues from the production or sale of fossil fuels.

While the methodology is clearly comprehensive in its screening out of ESG transgressors, as things stand the process actually results in the elimination of just one firm, tobacco company Swedish Match.

Understandably, the index has very similar sector distributions when compared to its parent – the weight of the consumer goods sector is slightly lower in the ESG index at 6.8% versus 8.7% for the parent. The largest sector exposures in the ESG index are industrials (33.7%), financials (31.3%), and technology (9.9%).

And the performance of the index is also highly correlated with the performance of the parent index.

Nasdaq Nordic has stated it plans to introduce similar ESG editions of the primary Danish and Finnish equity indices – the OMX Copenhagen 20 and OMX Helsinki 25 – later in the year.

The index is suitable as an underlying reference for investment products such as ETFs.