Financial services providers Barclays and MSCI have released three categories of environmental, social & governance (ESG) fixed income indices, which the companies say are the first fixed income performance benchmark indices based primarily on ESG factors.
The Barclays MSCI ESG Fixed Income Indices are made up of more than 500 standard and bespoke indices representing the widely used ESG strategies and investment objectives across three categories.
- Barclays MSCI Socially Responsible (SRI) Indices are intended for investors whose investments are governed by values-based policies and exclude issuers that engage in particular businesses activities that may be restricted for certain investors.
- Barclays MSCI Sustainability Indices apply a best-in-class methodology to select issuers with high ESG ratings relative to their peers. These indices are intended to identify companies that are more effective in managing the ESG risks unique to their industry.
- Barclays MSCI ESG Weighted Indices use ESG ratings to systematically over- and under-weight issuers within a bond index using an objective rules-based approach. These indices are targeted toward universal owners whose investment strategies express a view on the financial impact that ESG factors will have on their investments.
Institutional investors will be able to leverage these indices to create index-linked investment products, such as Exchange Traded Funds (ETFs), separately managed accounts, and structured products, based on ESG investment themes.
The companies said they established the indices to provide asset owners and managers with ESG commitments, such as the United Nations Principles for Responsible Investing signatories, with a comprehensive series of performance benchmarks.
This development follows the trend of increasing growth in sustainable investment strategies. Over the past 18 months the market for sustainable investments has doubled, from $5 billion to $9.5 billion.
The indices will be co-branded “Barclays MSCI” and will be independently marketed by both firms. The indices use ratings and other data, analysis and information from MSCI ESG Research.