The Warsaw Stock Exchange (GPW) is planning to launch a new ESG index by 3 September, reflecting what it says is growing demand for a solution that can identify relevant stocks in its existing WIG20 and WIG40 blue chip indices.
The WIG-ESG will adjust constituents according to ESG ratings and an assessment of compliance with principles set out in the Best Practice for GPW Listed Companies 2016 document. Sustainalytics will provide the ESG Risk Ratings.
Izabela Olszewska, member of the GPW Management Board, said: "In view of the dynamically growing market for responsible investing, we have decided to launch a new index, WIG-ESG."
"We are working in partnership with an independent firm of international standing which provides ESG research and ratings for some of the largest global investment firms and index providers. We are launching an investment product based on WIG-ESG in partnership with NN Investment Partners TFI: a fund whose investment portfolio focuses on ESG aspects. The first edition of WIG-ESG Index, primarily aims at drawing the attention of companies and potential investors to ESG criteria in the investment decision making process. We believe that in the coming years, environmental, social and governance scoring will have greater impact on both the weighting of each company and the index's portfolio."
For the past 10 years, GPW has been publishing the RESPECT index. In contrast, WIG-ESG will have a strong investment profile. GPW will publish both the WIG-ESG and RESPECT Index until the end of 2019, but WIG-ESG exclusively as of 1 January 2020.
Index data will be published every minute from the opening to the closing of each trading session. The participation of the largest stocks in the index portfolio will be capped according to funds' investment rules. WIG-ESG will be a total return index and will be the underlying of the index fund of NN Investment Partners TFI.
Robert Bohynik, NN Investment Partners TFI Board member and investment director, said: "NN Investment Partners TFI integrated ESG aspects (environment, society, governance) in our investment process as early as 2016. We now include ESG criteria in the management of all funds we offer. To launch a Polish passive fund tracking an exchange index comprising companies which follow high standards of corporate governance, mitigate their environmental impact and are socially responsible, we first had to develop such an index. We considered several partners, including foreign entities, and selected the Warsaw Stock Exchange, which is a competent and flexible partner."
The NN Indeks Odpowiedzialny fund will be created by transformation of the fund NN Akcji 2 (Shares 2), whose assets stand at Zł1.6bn. The criteria of stock liquidity and company size are key to the calculation of WIG-ESG.
"NN Investment Partners TFI funds integrate ESG aspects in the investment process to different degrees. We offer a portfolio which only invests in companies (mainly foreign) which pursue the UN sustainable development goals (UN SDGs); we offer funds which invest in companies with the highest ESG scorings (including Polish companies); and we also offer funds which exclude investments in companies that do not improve their ESG score. NN Indeks Odpowiedzialny will be a fund of the latter type. Its portfolio will include the stocks of companies which may not be ESG leaders, but are working to improve. We are launching such funds to support positive change and put issuers under pressure so they mitigate their environmental footprint and follow superior corporate governance standards," said Bohynik.
 GSIA - Global Sustainable Investment Alliance