Eurex is to expand the range of ESG derivatives to include five futures linked to an MSCI index that increases sustainability scores.
From May 31, futures will be available on the MSCI ESG Enhanced Focus Indices, which include US and emerging market sub-indices.
Eurex, the derivatives arm of Deutsche Bourse, said this would support investors seeking higher ESG scores while staying close to the benchmark.
The measure is also seen as a boost for ETF developments in ESG investing.
Jason Warr, regional head of EII markets at BlackRock, said the derivative were a “critical milestone in the development of the ETF trading ecosystem” and that the launch will help “deepen market liquidity and provide investors with access to new sustainable indexing strategies”.
MSCI World, USA, Emerging Markets, Europe and Japan indices will each have ESG derivatives linked to them that will maximise exposure to companies with a stronger ESG profile and reduce exposure to carbon.
Randolf Roth, a member of the Eurex Executive Board, said: “More advanced methods to select ESG investments are driving us to the next phase of ESG derivatives. We are already seeing this in the increasing demand for more sophisticated ESG index models in the ETF markets and hear similar requests from other active investment managers.”
In March 2020, Eurex introduced futures on MSCI ESG Screened Indexes that exclude companies not in compliance with the United Nations Global Compact principles or predefined ESG screening criteria.
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