S&P DJI Launches ESG Versions of S&P MidCap 400 and S&P SmallCap 600 Indices
Index provider S&P Dow Jones Indices (S&P DJI) announced today the launch of the S&P MidCap 400 ESG Index and the S&P SmallCap 600 ESG Index. With the debut of the new benchmarks, and together with the S&P 500 ESG Index, S&P DJI now offers ESG versions of its three headline U.S. equity indices, encompassing 90% of U.S. market capitalization.
Dan Draper, Chief Executive Officer of S&P Dow Jones Indices, said:
“We are proud to grow our core ESG indexing capabilities to cover the mid- and small-cap markets. At S&P DJI, we continue to find more ways to promote sustainability in global financial markets and economies through our innovative indices and benchmarks.”
The new indices are designed to closely replicate the risk and return profile of their underlying benchmarks, the S&P MidCap 400 and the S&P SmallCap 600, while providing a significant boost in ESG score performance. The indices use methodologies consistent with other S&P DJI ESG indices, including utilizing S&P DJI ESG scores for constituent selection and employing exclusions for companies with business activities in areas including thermal coal, controversial weapons, and tobacco, as well as companies with low UNGC scores, or ESG scores that fall within the lowest 25% from each GICS group.
S&P DJI noted the significant growth in investors interest in ESG products, with AUM tied to ESG ETFs nearly tripling to more than $170 billion in 2020, including growth of more than 260% in mid-cap and small-cap ESG ETFs.
Reid Steadman, Managing Director and Global Head of ESG Indices at S&P DJI, said:
“Since the launch of the S&P 500 ESG Index nearly two years ago, sustainability has become a top focus of not only investors but corporations as well. As we expand our global family of ESG benchmarks, one of our goals is to encourage companies to embrace the adoption and transparency of ESG factors. Our launch of mid-cap and small-cap ESG indices reflects that it’s no longer just the largest companies recognizing the need to better position themselves globally through sustainable business practices.”