ISS ESG, the sustainable investment division of Institutional Shareholder Services Inc. (ISS), and Qontigo, a leading provider of innovative index, analytics, and risk solutions, have jointly announced the launch of the ISS STOXX Biodiversity Index Suite.
The newly introduced index suite, developed in collaboration between ISS ESG and Qontigo, enables interested clients to align their portfolios with their biodiversity impact reduction goals. Within the suite, all indices exclude companies involved in activities that are deemed to cause significant harm to biodiversity or reduce the overall biodiversity footprint. The indices also emphasize alignment with United Nations Sustainable Development Goals (SDGs) related to biodiversity, such as those focusing on life below water and life on land. Furthermore, the index methodology targets a minimum 30% reduction in carbon intensity across the constituent companies.
Alongside the baseline family, the ISS STOXX Biodiversity Index Suite includes a Biodiversity Leaders family. This segment exclusively comprises companies that generate at least 20% of their revenues from activities assessed to make a positive net contribution to the SDGs. Notable activities within this category include the preservation of marine ecosystems, sustainable agriculture, and forestry.
“Biodiversity is one of the paramount themes of our age and calls for investors to understand and address its associated risks in their investment portfolios,” said Axel Lomholt, Chief Product Officer for Indices & Benchmarks at STOXX. “This launch comes as global investors are urged by some to account for and price nature into their sustainable investment strategies, and we are confident that the unique combination of our high-quality STOXX index suite, together with ISS ESG’s rigorous data sets, will prove valuable in enabling investors to align with their biodiversity objectives.”
The construction of each index family within the suite employs a detailed methodology, utilizing ISS ESG’s extensive datasets and a three-part framework. This framework follows an “avoid, minimize, and enable” approach: avoiding companies involved in activities harmful to biodiversity, minimizing exposure to companies with negative impacts on biodiversity, and capturing companies that actively contribute to positive biodiversity outcomes. It is worth noting that this framework goes beyond simple exclusion criteria and incorporates positive screening for companies with minimal negative impact on biodiversity, as well as those actively enabling biodiversity in line with the goals of the 15th Conference of the Parties (COP15).
“Investor focus on managing biodiversity impact has the potential to become as significant and enduring as the current focus on climate change,” said Lorraine Kelly, Global Head of Investment Stewardship at ISS. “The ISS STOXX Biodiversity Index Suite is the latest example of ISS ESG powering highly differentiated index offerings and we are delighted to partner with Qontigo on this series.”
