Bloomberg Launches New Suite of “Climate Tilted” Versions of Government Bond Indices
Bloomberg announced today the launch of the Bloomberg Government Climate Tilted Bond Indices, a new series of government bond benchmarks aimed at offering investors with exposure to its flagship fixed income benchmarks, in addition to the low-carbon transition, by increasing weightings on countries incorporating climate transition objectives.
At launch, the new series will include 14 indices, including global, Eurozone and emerging markets benchmarks.
In order to achieve the increased climate transition weightings, the new indices use Bloomberg Government Climate Scores (GOVS) to adjust country weights, which assess a government’s relative preparedness in the transition to a low-carbon world. Utilizing BloombergNEF data, the scores are comprised of three equally weighted pillars, including “Carbon Transition,” “Power Sector Transition,” and “Climate Policy.”
According to Bloomberg, the new indices aim to balance climate change risk and opportunity considerations with the need to maintain benchmarks that accurately reflect market liquidity and concentration risks. The firm added that the GOVS climate scores can be used for the creation of custom indices to meet investment specific portfolio objectives, such as minimum emissions reductions on a fixed year-over-year decarbonization trajectory.
Chris Hackel, Head of Sustainable Indices, Bloomberg Index Services Limited, said:
“The newly launched Bloomberg Government Climate Tilted Bond Indices are designed to consider not only a country’s progress against its climate ambitions, but also forward-looking measures of outlook, including investment in renewable energy capacity.”