S&P DJI to Develop Climate-Focused ESG Index for German Federal Government
Index provider S&P Dow Jones Indices (S&P DJI) announced that it has been selected by the Federal Government of Germany to develop the S&P ESG Eurozone 60 Bund-SV Index, which will serve as a performance benchmark for four of the government’s Federal Special Pension Funds.
The announcement follows the unveiling of a new sustainable finance strategy by the government, which included a commitment to allocate federal investments into sustainable investments, with plans to shift the federation’s various civil-service pension funds to sustainable indices, and a pledge to continuously reduce the carbon footprint of these portfolios.
Dan Draper, Chief Executive Officer at S&P Dow Jones Indices, said:
“We are proud and honored to have been selected by the Federal Government of Germany to develop an index for their pension funds, enabling them to measure and capture the financial risks associated with climate change, generate actionable insights, support their goals for a secure financial future and help advance a more sustainable society.”
According to S&P DJI, the new index will incorporate the minimum standards for EU Climate Transition Benchmarks as described in Regulation (EU) 2019/2089, and align with the landmark Paris Agreement.
Index constituents will be selected and weighted to be collectively compatible with a 1.5°C global warming climate scenario as well as other climate-focused objectives. Eligibility for inclusion in the index will be based on S&P Global’s ESG Scores, and the index will also employ screens for companies involved in certain business activities, including those that are not aligned with the principles of the United Nations’ Global Compact and those that are involved in ESG controversies.
“This important milestone reinforces S&P DJI’s view that ESG-focused indices are becoming more mainstream as European and global investors recognize that sustainability targets can complement and help achieve their goals for long-term asset protection and growth.”