Exchange in Focus: Euronext launches suite of ESG products
19 June 2020
Introducing new Euronext ESG 80 index and derivatives alongside aligning Europe’s leading Low Carbon 100 index to the Paris AgreementEuronext has partnered with Vigeo Eiris Moody’s to design a new ESG index, the Euronext Eurozone ESG Large 80, which tracks the Eurozone’s 80 Large Cap companies that are strong on social and governance criteria and are transitioning to a low carbon economy. This new index responds to investors’ need for a public climate action benchmark in the Eurozone. On 1 June 2020, Euronext introduced its first futures derivatives contracts based on an ESG index. The ESG 80 futures provide effective hedging tools and allow more investors to gain exposure to the sustainable economy in the Eurozone. Euronext, with its partners CDP, Carbone 4 and Vigeo Eiris Moody’s, also announced that Europe’s oldest low carbon index, the Low Carbon 100, is now aligned with the current draft of EU regulation on low carbon benchmarks in conformity with the Paris Agreement objectives, whose framework is to be officially adopted later this year. Through Exchange Traded Funds provided by BNP Paribas, the index provides investors with a ready-to-use tool to support the environmental objectives required by the Paris Agreement i.e. a 7% year-on-year reduction of CO2 emissions, a limit of 1.5°C global temperature rises by 2050 and exclusion of fossil fuel companies. Euronext currently provides clients with a comprehensive range of over 40 ESG index families based on a transparent and rules-based selection process, with input from expert partners in their fields such as Carbone 4, CDP, ISS-ESG and Vigeo Eiris Moody’s.
Expanding Euronext Green Bonds to ESG BondsCapitalising on the success of the Euronext Green Bonds offering introduced last November, with almost 70% increase in the number of issuers since launch, Euronext is expanding this offering to other ESG-related bonds, including blue, social, sustainability and sustainability-linked bonds. Euronext is the only exchange consolidating ESG bonds listed in multiple locations onto one highly visible section, thus providing a means for issuers to showcase their ESG credentials and for investors to rapidly identify ESG bonds. To date, 231 ESG bonds from 95 issuers are featured on the new Euronext ESG Bonds section. Euronext is the world’s number one bonds listing venue and has over €165bn of ESG bond issuances listed on its markets. €54.3bn of green bonds were listed on Euronext last year and represented almost one-fifth of global green bonds issued in 2019.
Launching new ESG Services to support listed companies in their ESG transitionAs investors increasingly factor ESG criteria into their investment strategies, Euronext has developed a suite of innovative solutions for listed companies through its Euronext Corporate Services offering. These tailor-made ESG Advisory services enable issuers to reach new investors by clarifying their ESG strategy for capital markets and building their ESG profile with relevant reporting and improved governance. Additional services include digital tools for virtual roadshows and remote governance, contributing to enhancing the investor relations and board management experience, and reducing the environmental impact from business travel. In January 2020, Euronext introduced a set of guidelines on ESG reporting for issuers. Drawing on recommendations from the UN Sustainable Stock Exchanges Initiative, the guidelines are designed to help listed companies structure their approach to ESG.
Bolstering the Blue EconomyAs an Official Supporter of the United Nations’ Sustainable Stock Exchange initiative, Euronext firmly commits to the UN’s “2030 Agenda for Sustainable Development”. Euronext is adding a new Sustainable Development Goal to the seven SDGs it has embraced in its ESG roadmap: “Goal 14: Life Below Water”. On 2 June 2020, Euronext became the first exchange to sign the nine Ocean Principles with the ambition to take a leading role in advancing the Blue Economy. Euronext contributed to the UN Global Compact Sustainable Oceans Business Group formalizing the UN Blue Bond principles, available since April 2020.
Stéphane Boujnah, Euronext CEO and Chairman of the Managing Board, said: “Today is an important milestone in executing the ESG roadmap of our three-year strategic plan ‘Let’s Grow Together 2022’. Euronext can significantly advance the European sustainability agenda through its unique role in financing the real economy, connecting local economies with global capital markets. Our ESG product strategy ensures investors can deploy their capital efficiently and transparently to support high-impact projects and companies. Furthermore, we are proud to be the first stock exchange to endorse the UN Global Compact’s nine Ocean Principles. Protecting our oceans and supporting marine conservation will be vital to repairing our ecosystems and bolstering the Blue Economy.”Learn more about Euronext's ESG strategy here.
About the SSE
The SSE initiative is a UN Partnership Programme organised by UNCTAD, the UN Global Compact, UNEP FI and the PRI. The SSE’s mission is to provide a global platform for exploring how exchanges, in collaboration with investors, companies (issuers), regulators, policymakers and relevant international organizations, can enhance performance on ESG (environmental, social and corporate governance) issues and encourage sustainable investment, including the financing of the UN Sustainable Development Goals. The SSE seeks to achieve this mission through an integrated programme of conducting evidence-based policy analysis, facilitating a network and forum for multi-stakeholder consensus-building, and providing technical assistance and advisory services.