Euronext has launched the BEL® ESG index, which identifies and tracks the companies within the BEL® 20 and the BEL® mid indices that have demonstrated the best environment, social and governance practices.
The BEL® ESG Index is designed to facilitate the adoption of mainstream ESG investment solutions by investors.
It is the fifth ESG Index variant for national blue-chip indices, following the introduction of the CAC® 40 ESG (France), the MIB® ESG (Italy), the AEX® ESG (the Netherlands) and the OBX® ESG (Norway).
For the index market data, Euronext has partnered with Sustainalytics, which will provide the ESG assessment of companies for the composition of the index.
Euronext said the BEL® ESG will be fully compliant with the non profit Central Labelling Agency’s ‘Towards Sustainability’ label, a high-quality standard for sustainable financial products such as indices and funds.
The index universe comprises companies within the BEL® 20 and BEL® mid indices meeting specific free float market cap and velocity criteria.
Exclusion filters are applied based on broad ESG standards and approaches adopted by institutional and private investors to exclude companies breaching Global Standards Principles and companies with involvement in controversial activities.
These include specific product involvement in tobacco, small arms, controversial weapons, military contracting weapons, thermal coal, oil sands, shale energy, Arctic oil & gas, oil & gas and power generation, according to Sustainalytics’ data.
An additional filter is applied to companies based on their Sustainalytics Subindustry ESG Risk Rating percentile ranking.
Eligible companies are ranked based on their Sustainalytics ESG ratings. The first 20 are selected and are free-float market capitalisation weighted in the BEL® ESG Index5.
The composition of the index will be revised on a quarterly basis while governance will be aligned with the BEL family rules.
“Euronext is committed to support companies taking ambitious steps towards more sustainable business models,” says Stéphane Boujnah, CEO and chairman of the Managing Board of Euronext.
He adds, “By combining the recognised BEL brand with a stringent and consensual ESG methodology while maintaining liquidity, The BEL® ESG responds to the market’s growing demand for sustainable investment tools.
Ita Demyttenaere, director client relations, Sustainalytics, said the BEL® ESG index was a significant milestone for the Belgian market thanks to its compliance with the Central Labelling Agency’s ‘Towards Sustainability’ label.
Morningstar Sustainalytics’ ESG data and robust methodology advance the index’s credibility by considering the ESG risk exposure management of the largest companies based on market capitalisation.”
©Markets Media Europe 2023
