Index engineering company Solactive, Institutional Shareholder Services’ (ISS) responsible investment arm, ISS ESG, and global financial services firm Morgan Stanley announced today the launch of the Solactive ISS ESG Future of Plastic Index, aiming to equip investors with a benchmark index of companies with leading practices and solutions addressing the plastic waste issue.
The companies stated that the new publicly listed index was developed in response to the growing focus by society to help address the plastic waste issue affecting the planet, and by investors as plastic waste becomes a growing investment theme.
Audrey Choi, Morgan Stanley’s Chief Sustainability Officer and CEO of the Institute for Sustainable Investing, said:
“The comprehensive scope of the Future of Plastic Index will empower investors with a means to identify and track companies that are leading the development of innovative plastic waste solutions and practices to combat the growing issue of plastic pollution in the environment. Building on the Morgan Stanley Plastic Waste Resolution and our Global Sustainable Finance team’s leadership in sustainability data and analytics, the Index selects companies successfully demonstrating the capacity to facilitate a shift toward circular plastic lifecycles, and overall a more sustainable future.”
According to the companies, Morgan Stanley developed the underlying methodology for the index, which starts with the Solactive GBS Developed Markets Large & Mid Cap Index universe, and uses data from ISS ESG to apply ESG screens. The screen excludes companies with verified ongoing failure to comply with established norms related to gender or racial discrimination or subject to global sanctions, companies with involvement in the research and development of controversial weapons, or which are active in business activities linked to significant environmental harm, such as coal mining. Eligible companies must also demonstrate a robust plan to avoid substantial negative impacts on marine ecosystems.
The index is constructed by investing in the equally weighted basket of the 50 “leaders” stocks ranked at the top of the proprietary scoring methodology, with companies ranked using a proprietary plastic waste solutions score, reflecting corporate involvement in recycling solutions and practices, use of recycled content, efficient use of raw materials, extension of useful product life, and/or developing alternatives to single-use and micro-plastics.
Dr. Axel Haus, Team Head Qualitative Research at Solactive, said:
“Plastic waste has become one of humanity’s greatest challenges. According to the WWF, individuals could consume 5 grams of microplastic per week, on a global average – the equivalent of one credit card. Together with Morgan Stanley, we have found a methodology to identify pioneering companies actively developing better solutions to produce, recycle, and reutilize plastics. We are very happy that Morgan Stanley has chosen Solactive as the index provider addressing this utterly important matter.”