Index and analytics provider Qontigo announced today that it has licensed its new DAX ESG Target Index to BlackRock for the launch of the iShares DAX ESG UCITS ETF, listed today on the Frankfurt stock exchange.
The index aims to serve as an ESG-enhanced version of the flagship German DAX benchmark index. It was deigned to reflect the risk and return characteristics of the original DAX Index while applying ESG screens, integrating ESG scores and reducing carbon intensity by at least 30%.
Stephan Flaegel, Chief Product Officer, Indices and Benchmarks at Qontigo, said:
“The DAX ESG Target Index is an innovative solution that represents the German market, made possible by the combination of analytics and indexing that is at the core of our approach at Qontigo. At Qontigo, we aim to provide our clients with building blocks to optimize impact for sustainable portfolios by offering choice to reflect their unique sustainability preferences.”
According to Qontigo, the index is constructed using the DAX Index, and employing exclusions based on Sustainalytics’ Global Standard Screening and product involvement screening for Controversial Weapons, Nuclear Power, Thermal Coal, Military Contracting, Tobacco Production, Small Arms and Oil Sands. The excluded companies are then replaced with companies included in the DAX, MDAX and TecDAX, based on free-float market capitalization and ESG scores. Component weights are derived through an optimization process with the goal of maximizing the portfolio ESG Score, meeting tracking error constraints and carbon reduction goals.
Dirk Schmitz, Country Head Germany, Austria and Eastern Europe at BlackRock, said:
“Since 1988, the DAX Index is tracking an essential part of the German economy, making it one of the leading price barometers. Many DAX companies do business on an international level. This means that in addition to their roots in the domestic market, they are also closely linked to the global economy. In this respect, the iShares DAX® ESG UCITS ETF reflects the strength of a large part of the German economy as well as the global economy. This makes it interesting for domestic and international investors. A sustainable and therefore forward-looking approach is aligned with our clients’ long-term goals.”