Global exchange and clearing house operator Intercontinental Exchange (ICE) announced today the launch of four new MSCI Index futures aimed at helping market participants better understand the opportunities and risks associated with climate change and transitioning to a low carbon economy. The new indices were introduced as part of ICE’s rollout of ten new benchmarks.

The new climate-focused indices include:

  • MSCI World Low Carbon Leaders NTR Index Future (WLC): The MSCI World Low Carbon Leaders Index is based on the MSCI World Index, and includes large and midcap stocks across 23 Developed Markets (DM) countries. The index addresses carbon emissions and fossil fuel reserves, providing clients with an effective tool for limiting the exposure of their portfolios to carbon risk, excluding companies with the highest carbon emissions intensity and the largest owners of carbon reserves per dollar of market capitalization.
  • MSCI World Low Carbon Target NTR Index Future (WLT): The MSCI World Low Carbon Target Index is based on the MSCI World Index. The Index is a benchmark for investors who wish to manage potential risks associated with the transition to a low carbon economy, overweighting companies with low carbon emissions relative to sales, and those with low potential carbon emissions per dollar of market capitalization.
  • MSCI Europe Climate Change NTR Index Future (EU1): The MSCI Europe Climate Change Index is based on the MSCI Europe Index, and includes large and mid-cap securities across 15 DMs in Europe. The index aims to represent the performance of an investment strategy that re-weights securities based upon the opportunities and risks associated with the transition to a lower carbon economy, while seeking to minimize exclusions from the parent index.
  • MSCI World Climate Change NTR Index Future (WOW): The MSCI World Climate Change Index is based on the MSCI World Index. The index aims to represent the performance of an investment strategy that re-weights securities based upon the opportunities and risks associated with the transition to a lower carbon economy, while seeking to minimize exclusions from the parent index

ICE stated that the new carbon- and climate-focused index futures capture exposure to large and mid-cap securities across developed countries and allow investors to holistically integrate climate and carbon risk considerations into their investment process.

George Harrington, Global Head of Futures and Options Licensing at MSCI, said:

“As the world’s largest provider of ESG indexes, we have witnessed fast adoption of climate indexes over the past 18 months as institutional investors look to position themselves for transition to a low-carbon economy. We are pleased to expand our relationship with ICE as investors around the world look to capture climate change risks and opportunities across the investment process.”

Caterina Caramaschi, Global Head of Equity Derivatives at ICE, said:

“ICE is the leading venue for MSCI Index Futures and lists more than 100 futures contracts. ICE remains committed to providing market participants with tools to benchmark and effectively manage equity risk across various geographic-specific and ESG-related index futures.”