Spanish bank BBVA announced today the launch of two new climate indices, Solactive BBVA Climate Action PAB Europe and Solactive BBVA Climate Action CTB Europe. The new indices will form part of BBVA’s sustainability-focused index family, launched recently under the bank’s newly launched Quantitative Investment Strategies (QIS) business for institutional investors. The indices were developed jointly with index engineering company Solactive, with data provided by ISS ESG.
BBVA stated that both of the indices carry the European Union (EU) climate benchmark label, based on EU standards for climate transition portfolios and ensuring investors transparency and comparability.
The Solactive BBVA Climate Action PAB Europe Index aims to provides exposure to a portfolio that accords with a well below 2ºC scenario through 2050, aligned with the EU benchmark indexes, and harmonized with the Paris Agreement (Paris-Aligned Benchmark). The index aims for a 50% carbon intensity reduction, as well as additional activity-based exclusions. The Solactive BBVA Climate Action CTB Europe Index aims to align with the EU Climate Transition Benchmark, featuring a 30% reduction in carbon intensity versus the benchmark.
Index constituent selection is based on Solactive’s carbon risk rating approach, pooling the 125 stocks with the highest rating for the final index, and then optimizing the selected securities to overweight the stocks with the best expected future CO2 performance while also meeting the requirements of the EU CTB and PAB regulation. Both indices also employ a set of baseline exclusions of controversial weapons and international norms violators.
Timo Pfeiffer, Chief Markets Officer at Solactive, said:
“The project kicked off in an unprecedented difficult time during a lockdown phase, but we have kept our focus to realize this important and impactful first set of indices, which all carry a strong ESG focus. We feel honored that BBVA has chosen Solactive as its index provider of trust for such a vital and meaningful investment vehicle, and it is always a pleasure for us to work with BBVA and its committed and dedicated team. We’re looking forward to intensifying our relationship with the release of more sustainability-focused indices with BBVA going forward.”