New ESG index: CAC SBT 1.5 °
Recently, Euronext announced the launch of a new ESG index, named CAC SBT 1.5 °. CAC SBF is an index of 120 stocks prepared by the Paris Stock Exchange. 1.5 ° is the company in line with the emission reduction plan of the Paris Agreement of 1.5 ° C. This new index will assist institutional and retail investors in making ESG investments.
In 2021, Euronext once launched CAC 40 ESG index to measure the 40 listed companies with the best performance in the ESG field in CAC 60 index. The CAC 40 ESG index focuses on the environment, society, and governance, while this CAC SBT 1.5 ° index focuses more on the environmental aspects in ESG, especially climate targets set in the Paris Agreement.
Calculation Method of CAC SBT 1.5 °
Euronext said that the procedure of creating the new ESG index involves:
- Firstly, according to the principles put forward by the United Nations Global Compact, negative screening is conducted for listed companies that do not meet the ESG requirements, and these constituent stocks are excluded from the index;
- Secondly, listed companies included in the index have publicly announced carbon reduction plans, and the target is set to be within 1.5 degrees Celsius;
- After determining the constituent shares, the index shall be prepared in the way of weighted market value;
- Index components will be adjusted quarterly, and the adjustment method will be consistent with the latest ESG standard of EU;
Market Views on the New Index
The carbon emission reduction plans of listed companies involved in CAC SBT 1.5 ° have been certified by SBTi. SBTi (Science Based Targets Initiative) is an organization that specially develops a guiding framework for carbon emission reduction targets for companies. The new ESG index component has promised to carry out emission reduction actions with a target of 1.5 degrees Celsius.
Euronext CAC SBT 1.5 index includes companies that have set clear and measurable greenhouse gas emission reduction targets, which have been verified by the Scientific Carbon Target Initiative. The launch of the index is a strong signal of the transition to responsible investment. As part of the ‘Fit for 1.5’ commitment in the Pan-European Exchange’s 2024 influence growth strategy, the exchange plays a vital role in enhancing its sustainable financial capability in all markets and supporting sustainable finance through the launch and release of ESG index.
Euronext
Scientific carbon targets enable companies to send a clear signal that they are serious about tackling the climate crisis. Investors can see which companies are taking ambitious corporate climate actions. This groundbreaking index enables institutions and individuals to easily invest in more and more enterprises, which are committed to controlling the emissions required for global warming below 1.5 ° C.
SBTi
In addition, the new index was launched with the help of Amundi, a asset management company and CDP, a Global Environmental Information Research Center.
Asset management companies can play a role in helping guide investment flows to climate change. ETFs can provide investors with access to responsible investment channels through their accessibility and transparency. We welcome the initiative of Euronext and plan to launch an ETF to track the new climate index.
Amundi
CAC 40 1.5 ° C index can create more sustainable financial products in the market, combat the problem of greenness, and allow investors to only contact companies that have approved 1.5 ° C emission reduction targets. Scientific carbon targets are the best assessment of the company’s total impact on market emissions. Without these targets, the company cannot convincingly show that they are taking credible climate action.
CDP
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