Zurich-based financial data and infrastructure provider SIX has introduced a suite of environmental, social, and governance (ESG) indices covering Swiss equity and bond markets.
SIX has unveiled ESG versions of its popular SPI and SBI index families.
The indices are derived from the Swiss Performance Index (SPI) and Swiss Bond Index (SBI) universes, with adjustments to composition implemented according to sustainability criteria.
In developing its ESG indices, SIX has drawn on data sources including the independent Swiss sustainability rating agency Inrate.
The proprietary ESG Impact Rating developed by Inrate that feeds into the indices measures the positive and negative impacts of companies on the environment and society.
SIX offers two indices based on the SPI equity index, the SPI ESG Weighted Total Return and the SPI ESG Total Return.
For bonds, there are 20 new indices covering a range of credit risk buckets, maturity segments, and issuer domiciles. Examples include the SBI ESG AAA-BBB and the SBI ESG Corporate.
To be included in the indices, a company must have an ESG Impact Rating of at least a C+ and generate no more than five percent of its revenue in a ‘disputed’ sector. According to the index regulations, these ‘disputed’ sectors are adult entertainment, alcohol, armaments, gambling, genetic engineering, nuclear energy, coal, oil sands and tobacco.
Index candidates also cannot appear in the exclusion list of the Swiss Association for Responsible Investments.
Commenting on the indices, Marion Leslie, Head Financial Information and member of SIX Executive Board, said: “SIX is introducing ESG indices with broad coverage of Swiss equities and bonds for the first time. In doing so, we are creating new opportunities for investors to target their investments with sustainable criteria. This is in line with our strategy to consistently evolve our data offering to provide solutions for future market needs.”
Christoph Müller, CEO of Inrate, added: “Investors integrate ESG into their investments in order to incorporate general concerns and values of society and to expand the data basis for investment decisions. This requires a high degree of comparability, systematics and, if possible, quantification. Inrate wants to take the leading role in this.”