S&P Dow Jones Indices has launched the S&P Green Bond Select Index, capturing the most liquid and tradeable segment of green-labelled bonds issued globally.
Green bonds are debt instruments issued to finance projects or activities that promote climate change mitigation or adaptation, or for other environmental sustainability purposes.
“We continue to see strong demand for investment opportunities that incorporate environmental, social and corporate governance (ESG) factors,” said Reid Steadman, Deputy Head of Product Management at S&P Dow Jones Indices. “The S&P Green Bond Select Index is a benchmark for market participants seeking to monitor developments in this critical area of green finance.”
Green bonds are debt instruments issued to finance projects or activities that promote climate change mitigation or adaptation, or for other environmental sustainability purposes. Only bonds that are designated “green” by the Climate Bonds Initiative (CBI), an investor-focused non-profit organisation working to promote large-scale investment in the low carbon economy, are eligible for inclusion.
Bonds issued in any market are eligible for inclusion as long as the bond is denominated in a G10 currency. Each bond must have a maturity greater than one month from the index’s rebalancing date. No bond matures in the index.
The index is weighted by market value, with a 10% issuer cap and a maximum allocation of 20% to high yield bonds.
It has been licensed to VanEck for the creation of an exchange-traded fund.
“We are seeing increasing interest from investors for ways to build sustainable, environmentally conscious portfolios, but until now they have had few investible fixed income index solutions,” said Edward Lopez, Head of ETF Product Management and Marketing at VanEck. “We believe the S&P Green Bond Select Index provides an excellent foundation for financial products such as ETFs, which can provide efficient and cost-effective access to the green bond market. We look forward to working with S&P Dow Jones Indices and helping fixed income investors achieve their investment objectives while still making a positive impact on the environment.”