A suite of global fixed income indices integrating environmental, social and governance (ESG) factors into a composite benchmark has been launched by JP Morgan in collaboration with BlackRock.
The JP Morgan ESG (JESG) is aimed at investors who want to incorporate ESG and responsible investing in their overall fixed income investment strategies.
The new index is independently managed by JP Morgan. Its methodology is anchored to indices such as the JPMorgan Emerging Market Bond Index and the JPMorgan Government Bond Index-Emerging Markets.
Issuers with better ESG scores will have their weights increased relative to their baseline index weights. The JESG suite will also overweight green bond issuances.
Ethical screening will be applied for “controversial” sectors: thermal coal, tobacco, weapons and any violator of the United Nations Global Compact principles.
Sergio Trigo Paz, head of BlackRock emerging market debt, said: “Sustainable investing is about investing in progress and pioneering better ways of doing business. Strong ESG practices positively impact creditworthiness in the long-term, and up until now ESG in emerging market debt has been more bespoke and project-based, as opposed to providing solutions at scale.”
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