SIX launches ESG indices to address investor demand

Rick Steves

The trading industry must always keep pace with geopolitical and technological disruption along with client demand. The ESG products must not be overlooked.

SIX Group has launched its first ESG indices to address overwhelming demand from investors. The criteria were drawn from the independent Swiss sustainability rating agency Inrate.

The two SPI ESG indices for equities launched by SIX Group are based on the Swiss Performance Index (SPI). THe company also released 20 new SBI ESG indices for bonds, all based on the Swiss Bond Index (SBI).

Marion Leslie, Head Financial Information and member of SIX Executive Board, commented: “SIX is introducing ESG indices with broad coverage of Swiss equities and bonds for the first time. In doing so, we are creating new opportunities for investors to target their investments with sustainable criteria. This is in line with our strategy to consistently evolve our data offering to provide solutions for future market needs.”

SIX’s ESG indices require companies to have an ESG Impact Rating of at least a C+ and generate no more than five percent of its revenue in a critical sector (adult entertainment, alcohol, armaments, gambling, genetic engineering, nuclear energy, coal, oil sands, and tobacco).

Christoph Müller, Chief Executive Officer at Inrate, said: “Investors integrate ESG into their investments in order to incorporate general concerns and values of society and to expand the data basis for investment decisions. This requires a high degree of comparability, systematics and, if possible, quantification. Inrate wants to take the leading role in this.”

ESG investing has been on the rise in recent years. Trading companies have been addressing the demand for “responsible investing” with indices and innovative trading operations. Deutsche Bank has recently announced the plan to launch trades with an environmental, social, and governance (ESG) component.

“We will do them. When there’s client demand for a solution then banks will step up to the plate, so I’m already firing emails about it”, said Christopher Wall, global head of foreign exchange structuring at Deutsche Bank.

Retail FX brokerage CedarFX launched an Eco Account, where traders who opt to use this particular product will be charged a $1 commission fee per lot traded, which will be matched by CedarFX at the end of each month, for carbon reduction.

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