In conjunction with the United Nations’ International Day for Biological Diversity, ISS ESG, Institutional Shareholder Services Inc.’s sustainable investment division, and Qontigo, a pioneering provider of index, analytics, and risk solutions, announced the debut of the ISS STOXX Biodiversity Index Suite. This move aligns with the global push to incorporate nature conservation efforts into sustainable investment strategies.
The newly introduced index suite assists clients in adapting their portfolios to meet their biodiversity impact reduction goals. It comprises a range of indices, excluding companies involved in operations deemed to harm Biodiversity or shrink the biodiversity footprint significantly. The suite also enhances alignment with biodiversity-focused U.N. Sustainable Development Goals (SDGs), such as “life below water” and “life on land.” An integral part of the index methodology is to aim for an aggregate reduction in the carbon intensity of at least 30 percent among all constituent companies.
The ISS STOXX Biodiversity Index Suite includes a Biodiversity Leaders family and its baseline family. This segment solely includes companies that generate a minimum of 20 percent of their revenue from activities that positively impact the SDGs, like sustainable agriculture, forestry, and the preservation of marine ecosystems.
Axel Lomholt, Chief Product Officer for Indices & Benchmarks at STOXX, stated, “Biodiversity is one of the most significant issues of our time, necessitating investors to understand and manage its associated risks within their investment portfolios. We are confident that the unique combination of our high-quality STOXX index suite and ISS ESG’s comprehensive data sets will help investors align with their biodiversity objectives.”
A detailed index construction methodology underlies each new index family, relying on ISS ESG’s comprehensive datasets and a three-part selection framework: avoid companies involved in activities harmful to Biodiversity, minimize exposure to companies negatively impacting Biodiversity, and capture companies enabling a positive biodiversity impact via high scores on biodiversity solutions. This framework extends beyond simple exclusion criteria, favorably screening for companies with a minimal negative impact on Biodiversity and those actively fostering global Biodiversity, thereby aligning with COP15 goals.
Lorraine Kelly, the Global Head of Investment Stewardship at ISS, noted, “The ISS STOXX Biodiversity Index Suite is the latest example of ISS ESG’s drive to power differentiated index offerings. The focus on managing biodiversity impact among investors has the potential to be as significant and enduring as the current focus on climate change. We are thrilled to partner with Qontigo on this series.”
Photo by Noah Buscher on Unsplash
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