Index provider S&P Dow Jones Indices (S&P DJI) and TMX Datalinx announced today the launch of two new ESG indices, the S&P/TSX Composite ESG Index, and the S&P/TSX 60 ESG Index. S&P DJI stated that the new indices aim to provide investors with core exposure to the Canadian equities market while providing a significant boost in ESG score performance.
Reid Steadman, Managing Director and Global Head of ESG Indices at S&P DJI, said:
“In the last year, ESG has joined the mainstream of investing as market participants increasingly see the importance and relevance of indices that incorporate sustainability data and principles. The S&P/TSX ESG Indices are designed to target the core of an investor’s portfolio by giving them broad equity exposure in line with their sustainable investment goals. We’re thrilled to work with TSX to bring this strategy to the Canadian market.”
Both of the new indices employ exclusions, based on specific thresholds, including thermal coal, tobacco, and controversial weapons, as well as low UNGC scores and low ESG ratings. The S&P/TSX Composite ESG Index is a broad-based, market-cap-weighted index that is designed to measure the performance of securities meeting sustainability criteria, while maintaining similar overall industry group weights as the S&P/TSX Composite. The S&P/TSX 60 ESG Index sets weights based on constituent weights in the S&P/TSX 60 Index, then adjusts weights so that companies with relatively high S&P DJI ESG Scores are overweighted, while relatively low scoring companies are underweighted to improve the index’s overall ESG exposure.
Sarah Ryerson, President, TMX Datalinx, said:
“We are excited to be working with S&P Dow Jones Indices to launch these enhanced tools to help integrate ESG considerations into the investment process. As global interest in sustainable investing continues to grow, these indices will provide investors with increased exposure to sustainable investments and enable them to more efficiently manage risks associated with ESG in their portfolios.”
Along with today’s launch, Invesco Canada announced the introduction of a new ETF, the Invesco S&P/TSX Composite ESG Index ETF, providing investors with exposure to the new ESG index.