Bloomberg and MSCI have collaborated to offer joint Climate Benchmarks, including the Bloomberg MSCI Global Corporate, the Bloomberg MSCI Euro Corporate and the Bloomberg MSCI US Corporate Paris-Aligned Indices,
These indices will serve as a benchmark for investors to assess the performance of corporate bond holdings that seek to meet or exceed the minimum standards of the EU Paris-Aligned Benchmark (PAB) label.
They combine Bloomberg’s comprehensive fixed income indices family with MSCI’s Climate data, research, and analytics for investment-grade, fixed-rate, and global, US or euro-denominated corporate bonds.
To ensure they meet the minimum PAB criteria, each index sets an initial 50% reduction of absolute greenhouse gas (GHG) relative to the standard Bloomberg parent Euro, US, or Global corporate index, followed by an annual 7.5% decarbonization relative to the baseline emissions.
These emissions reductions are achieved by excluding the largest GHG emitting companies.
“As global investors increasingly seek to align with the transition to a low-carbon economy, it is imperative that asset managers and ETF issuers have reliable, data-driven indices that can help quantify climate-specific risks and opportunities,” said Chris Hackel, index product manager, Bloomberg.
He added. “This joint offering provides the market with a transparent and systematic approach for investors to conform to global frameworks, and we look forward to working with clients to further customize off the foundation of these benchmarks to fit their individual investment strategies.”
The indices use an exclusions-based approach to achieve the required decarbonisation trajectory. The monthly exclusions process will establish the emissions threshold required to maintain compliance with the PAB label decarbonisation trajectory for the following month.
“These Climate Fixed Income Indexes from MSCI and Bloomberg will enable investors to utilize MSCI’s industry-leading climate data while aiming to align with the Paris Agreement requirements of limiting global warming to no more than 1.5°C,” said George Harrington, managing director & global head of fixed income & derivatives, MSCI.
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