FTSE Russell Launches European Climate Risk Index


The new index takes three factors into account when assigning a score for climate risk

FTSE Russell has launched a new fixed income offering in Europe that weighs factors in each country’s efforts to mitigate climate change.

The FTSE Climate Risk-Adjusted European Monetary Union Government Bond index is the first of its kind to measure these factors, according to the company’s press release today.

The index focuses exclusively on EMU countries (those that have adopted the euro as their currency.) The index uses climate scores from Beyond Ratings, which provides ESG data and analytics to the London Stock Exchange.

FTSE Russell EMU Index

The EMU risk data focuses on climate risk in three categories.

  • Physical risk: The physical risks a nation faces due to climate change;
  • Resilience: The measure of a nation’s preparation for climate change; and,
  • Transition risk: The score a nation receives for meeting its emissions targets tied to the Paris Climate Agreement.

“There is increasing awareness of how sovereign states are uniquely exposed to the risks of climate change,” said Sylvain Chateau, co-founder and COO of Beyond Ratings. “This has, in part, driven client demand for climate risk-adjusted fixed-income indexes since the launch of Climate WGBI (the FTSE Climate Risk-Adjusted World Government Bond Index), particularly from European investors. With this launch, the Climate EGBI now offers European sovereign debt investors an efficient means to quantitatively assess and reduce climate risk and GHG (greenhouse gas) emissions in their portfolios.”

Related: Liquid Alternatives: In 2019, Globally, and especially in Europe, ETFs Raked It In

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