Two sustainability indices launched covering 500 major U.S. firms

U.S. financial index provider S&P Dow Jones Indices (S&P DJI) has launched two new indices to assist investors in identifying companies that have strong sustainability credentials.

S&P DJI announced the S&P Environmental & Socially Responsible Index and the S&P International Environmental & Socially Responsible Index on 24 June and they will cover firms in the S&P 500 which includes 500 large companies trading in U.S. stock markets.

An index measures the value of a portfolio of companies and tracks their group performance and trends.

The newly launched indices are aimed at investors who are targeting companies that have strong environmental and sustainable practices.

S&P Dow Jones Indices said a growing number of investors, including those which comply with the United Nations-backed Principles of Responsible Investment (PRI), want to see more environmentally and socially responsible companies in their investment portfolios.

The PRI initiative supports investors who are committed to adopting Environmental, Social and Governance (ESG) principles in their investment decisions.

Alka Banerjee, Managing Director at S&P Dow Jones Indices said: “By drawing upon broad market, widely recognised indices like the S&P 500 and S&P Global BMI, we are able to offer the market a unique perspective on the performance of companies that have a strong profile in addressing environmental and social challenges.”

Eligible firms are given environmental and social (E&S) dimension scores provided by financial management firm RobecoSAM.

Seventy-five per cent of the companies with the highest E&S ranking will be selected for index membership, according to S&P DJI.

It will exclude firms that are involved in fossil fuel-heavy industries or in the production and sale of tobacco, cluster bombs, landmines, nuclear and other military armaments.