The owner of Hong Kong’s Hang Seng Index said it will jointly develop a new benchmark for Asia stock market investors who want to integrate climate change considerations into their investment portfolios.
Hang Seng Indexes said it would partner with Wilshire, an investment technology and advisory company, to launch the Hang Seng Climate Change 1.5°C Target Index.
The index has been constructed to make reference to the EU Paris Aligned Benchmark (PAB) Standard as it applies to Asia stock markets.
The PAB aims to help limit the rise in global temperature to no more than 1.5°C compared to pre-industrial levels by encouraging asset managers to develop investment portfolios that can reduce carbon emissions.
Using the Hang Seng Large-Mid Cap (Investable) Index as its underlying index, the new index makes reference to the minimum requirements set out in the PAB to achieve specific climate improvements.
The constituents of the underlying index are screened for their compliance with sustainability-related international guidelines and for involvement in controversial products or services, Hang Seng Indexes said.
After these screenings, the remaining constituents will be re-weighed based on their greenhouse gas (GHG) emission intensities. Constituents with lower GHG emission intensities will have an increased weighting in the new target index.
“Hang Seng Indexes has been striving to address investors’ growing interest in sustainability and low-carbon economy-focused tools and strategies by enriching its ESG product suite,” chief executive Anita Mo said.
Wilshire said it would also collaborate with Nikkei to develop PAB indexes for other Asia stock markets.
- George Russell