S&P Dow Jones Indices, one of the world's leading index providers, has announced the launch of the two Paris-Aligned Climate Transition (PACT) indices.
The two eurozone indices, S&P Eurozone LargeMidCap Paris-Aligned Climate Index and the S&P Eurozone LargeMidCap Climate Transition Index, have been designed with a holistic approach to incorporate a broad range of climate and sustainability-based objectives.
These include the climate objectives and minimum standards for the European Union (EU) Paris-Aligned Benchmark (PAB) and EU Climate Transition Benchmark (CTB) as specified by the EU Sustainable Finance Technical Expert Group (TEG) in its September 2019 Final Report on Climate Benchmarks and Benchmarks' ESG Disclosure.
The two eurozone indices have been designed with a holistic approach to incorporate a broad range of climate and sustainability-based objectives."
The EU created the PAB and CTB classifications and standards not only to fulfill risk reduction goals but also to create opportunities that will emerge as European economies transition to a low-carbon, climate resilient and more resource efficient one.
The indices incorporate the Financial Stability Board's Task Force on Climate-Related Financial Disclosures' (TCFD) recommendations for assessing climate-related risks, opportunities and financial impacts.
"There is a growing urgency in Europe and globally to identify solutions that address the negative consequences companies and institutions face due to climate change. The PACT Indices provide transparency with respect to these consequences and investment strategies that address climate change risks and opportunities," said Reid Steadman, Global Head of ESG Indices at S&P Dow Jones Indices.
The PACT Indices utilize rich proprietary datasets and analytics from Trucost, part of S&P Global. The indices measure the performance of eligible equity securities from the S&P Eurozone LargeMidCap Index, selected and weighted to be collectively compatible with a 1.5°C global warming climate scenario and to meet several other climate-focused objectives.
The company said the indices are developed to help investors and other market participants align their investments and manage climate-related risks and opportunities.