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FTSE Russell new “Smart Sustainability” index launched and selected for LGIM Future World Fund

 

  • FTSE Russell launches new FTSE All-World Ex CW Climate Balanced Factor Index
  • LGIM selects index to form basis of new Future World Fund
  • HSBC Bank UK Pension Scheme selects Future World Fund as its equity default option in its DC scheme
  • HSBC and LGIM input into design of this new “Smart Sustainability” index which combines smart beta approach with climate change considerations
  • Constituent green revenues determined by FTSE Russell’s Green Revenues (LCE) data model

FTSE Russell, the global index provider, announces the creation of a new index, the FTSE All-World Ex CW Climate Balanced Factor Index. It is the first FTSE Russell index to combine a smart beta factor approach alongside climate change considerations building on FTSE Russell’s strong track record in ESG (Environmental, Social and Governance) benchmarks, data and analytics. The index incorporates a range of factor and sustainability parameters in the index design.  The index has been chosen by Legal & General Investment Management (LGIM) for its new Future World Fund, which HSBC Bank UK Pension Scheme has selected for its equity default option, worth £1.85 billion, in its DC scheme.

The innovative index methodology tilts constituent weights to provide increased but balanced exposures to value, quality, low volatility and size factors. It then incorporates climate change considerations through three parameters; carbon efficiency, fossil fuel reserves and the green revenues of constituents, using FTSE Russell’s Green Revenues (LCE) data model. The transparent, rules-based construction reflects the performance of eligible securities from the FTSE All-World Index, excluding companies involved in manufacturing weapons banned under international treaties such as cluster munitions and land mines.

Chancellor of the Exchequer, Philip Hammond said:

“Three of Britain’s biggest companies have come together for the launch of this ground-breaking new fund, which is a testament to our status as the world’s leading financial centre. Our ability to continually innovate means we are well positioned to benefit from the opportunities a growing green finance industry presents”.


Mark Makepeace, CEO of FTSE Russell, said:

“This new ‘Smart Sustainability’ index, combining a smart beta approach with a focused set of sustainability parameters, represents a new and exciting approach for the integration of ESG into passive investment strategies, and sets a new standard for DC funds.”


Mark Zinkula, CEO of Legal & General Investment Management said:

“It is crucial that pension funds are able to offer their members better risk-adjusted returns while helping to manage climate risk. Our Future World Fund which combines a multi-factor approach with climate change considerations is aimed at doing just that.”


Mark Thompson, Chief Investment Officer at HSBC Bank UK Pension Scheme said:

“We believe this fund will offer our members a better risk adjusted return, incorporate some climate change protection and deliver improved company engagement. This is a mainstream fund, the new normal.”


London Stock Exchange Group is a pioneer in supporting the growing global green and sustainable financing movement, providing a comprehensive green and sustainable product offering.
 
Further information can be found online at our Global Sustainable Investment Centre.

– Ends –

 


For further information:

Global Media    
Ed Clark +44 (0)20 7797 1222
Tim Benedict +1 212 314 1220
newsroom@lseg.com

Regional Contacts
Hong Kong: Fennie Wong +852 2164 3267
Sydney: Laura McCrackle    +61 2 8823 3526

 

Notes to editors:

About FTSE Russell:

FTSE Russell is a global index leader that provides innovative benchmarking, analytics and data solutions for investors worldwide.  FTSE Russell calculates thousands of indexes that measure and benchmark markets and asset classes in more than 70 countries, covering 98% of the investable market globally.

FTSE Russell index expertise and products are used extensively by institutional and retail investors globally. Approximately $10 trillion is currently benchmarked to FTSE Russell indexes. For over 30 years, leading asset owners, asset managers, ETF providers and investment banks have chosen FTSE Russell indexes to benchmark their investment performance and create ETFs, structured products and index-based derivatives.

A core set of universal principles guides FTSE Russell index design and management: a transparent rules-based methodology is informed by independent committees of leading market participants. FTSE Russell is focused on applying the highest industry standards in index design and governance and embraces the IOSCO Principles. FTSE Russell is also focused on index innovation and customer partnerships as it seeks to enhance the breadth, depth and reach of its offering.

FTSE Russell is wholly owned by London Stock Exchange Group.

For more information, visit www.ftserussell.com  

 

 

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