Eurex Expands Derivatives Suite for ESG Investors With Launch of Futures on MSCI Indices
Deutsche Börse’s derivatives-focused exchange Eurex announced an expansion of its suite of ESG products with the launch of five futures on MSCI’s ESG Enhanced Focus Index family. According to Eurex, the launch comes amid rising demand for sustainability-focused investment, and provides tools for investors seeking higher ESG scores while at the same time staying close to their benchmarks.
The new products add to Eurex’s family of ESG derivatives, which include futures on MSCI ESG Screened Indexes covering USA, World, EM, EAFE, and Japan, launched in March 2020, and a series of futures and options on the EURO STOXX 50 ESG Index, and the DAX 50 ESG Index, launched in November.
Randolf Roth, Member of the Eurex Executive Board, said:
“More advanced methods to select ESG investments are driving us to the next phase of ESG derivatives. We are already seeing this in the increasing demand for more sophisticated ESG index models in the ETF markets and hear similar requests from other active investment managers.”
According to MSCI, the ESG Enhanced Focus Indexes are designed to maximize exposure to positive ESG metrics while reducing exposure to carbon dioxide and other greenhouse gases, as well as their exposure to potential emissions risk of fossil fuel reserves by 30%. The index series also employ exclusions for companies involved in controversies, as well as for companies with business activities activities related to thermal coal, oil sands, tobacco, and controversial weapons. The indices aim to maintain risk and return characteristics similar to those of their respective underlying market capitalization weighted indexes. The new Eurex futures are the ESG Enhanced versions of the benchmark indexes MSCI World, USA, Emerging Markets, Europe, and Japan.
George Harrington, Global Head of Listed Derivatives, OTC and Structured Products at MSCI, said:
“The MSCI ESG Enhanced Focus Indexes seek to maximize their ESG profile and reduce carbon exposure while maintaining risk and return characteristics similar to the underlying parent index. The launch of these futures significantly grows the ecosystem that uses the MSCI ESG Enhanced Focus suite.”