- The new index series includes ESG-adjusted variants of the flagship FTSE 100, FTSE 250, FTSE 350 and FTSE All-Share indices
- Methodology Risk and return characteristics are balanced with ESG characteristics to provide an investible ESG alternative to the standard UK Equity Index Series
- Index integrates ESG risks such as controversial products and conduct, carbon (emissions and reserves) and the management of ESG issues
Index provider FTSE Russell has announced the introduction of the FTSE UK ESG Risk-Adjusted Index Series, which includes ESG-adjusted variants of its flagship indices such as the FTSE 100, FTSE 250, FTSE 350, and FTSE All-Share indices. The launch of these indices aims to incorporate important ESG considerations into the prominent UK Series, offering investors exposure to broad ESG improvements while maintaining key index characteristics like risk, return, and tracking error.
FTSE Russell stated that the introduction of these indices fulfils the demand from clients seeking ESG-focused index products and provides a straightforward ESG-adjusted version of the primary UK equity benchmark series to meet various implementation requirements of their customer base.
The series employs the FTSE Russell Target Exposure methodology to assess ESG performance. It excludes companies involved in controversial weapons, thermal coal production, energy generation from thermal coal, Arctic oil and gas exploration, oil sands and shale energy extraction and production, tobacco production and retail, and controversial conduct.
The new indices offer notable features, including a targeted 50% reduction in exposure to fossil fuel reserves, a 50% reduction in carbon emissions intensity, and an ESG score improvement target of 5% above the aggregate benchmark FTSE’s ESG scores. FTSE Russell highlights that UK companies generally achieve comparatively high ESG scores.