Frankfurt-based index provider Solactive has launched a new ESG fixed income index – Solactive CarbonCare Asia Sustainability Bond Index – measuring the performance of green and other sustainable bonds from issuers in the Asia Pacific region.
Steffen Scheuble, CEO of Solactive.
The index has been designed in partnership with Carbon Care Asia (CCA), a Hong Kong-based carbon and sustainability consultancy, and is suitable as an underlying reference for index-linked investment products such as ETFs.
The index consists of sovereign and corporate bonds from issuers in APAC countries including Australia, Bangladesh, Cambodia, China, Hong Kong, India, Indonesia, Japan, Laos, Macau, Malaysia, Mongolia, Myanmar, New Zealand, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Thailand, Taiwan, and Vietnam.
The index includes fixed-rate, zero-coupon, step-up, step-down, and fixed resettable bonds that meet minimum size thresholds and have at least one year remaining to maturity.
Eligible bonds are required to pass two layers of screening by CCA. The first removes bonds with inadequate transparency and reporting standards related to the use of proceeds. The second utilizes CCA’s proprietary classification system to identify bonds with proceeds that have been designated for projects with “significant positive outcomes”. Constituents are weighted by market value, and reconstitution occurs on a quarterly basis.
The index currently consists of more than 80 bonds with a weighted average yield to maturity of 2% and a duration of four years.
Steffen Scheuble, CEO of Solactive, commented, “We are excited to participate in the growth story of the green, social, and sustainability bonds in the Asia Pacific region. We hope that this index will be a valuable tool for asset owners in managing their ESG mandates and that it will serve as a reference for the wider investment community. With CCA, we are pleased to have collaborated closely and look forward to providing more innovative and ESG indices to the market.”
Albert Lai, CEO of Carbon Care Asia, added, “This index is a long-awaited initiative to address the trust gap and to enable investors to track the performance of Asia Pacific bonds that can demonstrate high integrity and transparency in environmental and social contributions.
“As a mission-driven consultancy, the launch of this index is another step in pursuit of CCA’s mission to promote sustainability practices and to accelerate the transition to a net-zero carbon economy.”