This Week’s Tech and Tool News: Eurex Launches MSCI-based ESG Futures

ESG Investor’s weekly round-up of news on technology and tools in the sustainable investing sector, including Eurex, MSCI, ISS, IHS Markit, Corlytics, iClima Earth.

Derivatives exchange operator Eurex has expanded its suite of ESG derivatives to include futures on the MSCI ESG Enhanced Focus Indexes, to support investors looking to improve their ESG scores while staying close to the benchmark. The underlyings for the five new futures are the ESG Enhanced Focus versions of the benchmark indexes MSCI World, USA, Emerging Markets, Europe, and Japan. The MSCI ESG Enhanced Focus Indexes aim to maximise exposure to companies with strong ESG profiles, while reducing exposure to greenhouse gases and emissions risk from fossil fuel reserves. An integrated optimisation process ensures that a targeted tracking error to the parent index is not exceeded. “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,” said Randolf Roth, Member of the Eurex Executive Board. The new contracts add to the second generation of ESG derivatives linked to indexes that integrate ESG ratings as part of their selection and weighting process. In March 2020, Eurex introduced futures on MSCI ESG Screened Indexes covering USA, World, EM, Europe, Australasia, and the Middle East, and Japan. These indexes exclude companies not in compliance with the United Nations Global Compact principles or predefined ESG screening criteria.

Institutional Shareholder Services (ISS), a provider of market intelligence and fund services to the global asset management community, including proxy voting and ESG solutions, has acquired New York-based Genesys Research, which specialises in data and research solutions for asset managers and insurers. According to ISS, Genesys will be folded into ISS Market Intelligence (ISS MI), which will focus on the “continued expansion of product capabilities and client engagement” across its platform and research groups. In the near term, clients will benefit from access to a combination of both Simfund Subadvisory products and Genesys Fund Intel Toolkit solutions, as well as Genesys’ leading offerings on relevant market developments, fund research, and platform diligence.  In the future, the fully integrated solution will be part of the global ISS MI platform, which will provide coverage of additional geographies, integration of proprietary product metrics, and use of advanced analytics. “The combination of Genesys Research’s capabilities with our existing platform solutions supports our continued mission of delivering a unique combination of data, analytics, and insight capabilities to our clients,” said Ben Doob, Head of ISS MI.

Data and analytics provider IHS Markit has reached an agreement to provide its ESG Reporting Repository to the Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV), which will recommend use of the platform to the 2,300 companies listed on the Canadian exchanges. The deal will enable listed firms to navigate ESG and climate change reporting and data management demands and adopt global ‘best practices’, using the platform to streamline their ESG reporting and access peer and investor insights. IHS Markit’s ESG Reporting Repository supports 17 leading voluntary and regulatory ESG schemas and provides users the ability to upload, cross reference and compare ESG data across all supported frameworks.

Dublin-based Corlytics has launched a monitoring solution aimed at helping users to better understand risk-rated regulatory information across both ESG and their sub-set of themes. Corlytics ESG Monitoring is a single dashboard offering structured, analysed and visualised ESG-specific information from financial regulators globally. It offers clients access to a fully digitised, searchable universe of current, pending and emerging ESG regulation data with slice and dice data capability and API functionality. “ESG regulation is different to monitoring other types of regulatory changes and notices, as only a small percentage of envisioned regulations are in final form, many are either at consultation stage or earlier. We expect rapid change as discussion and consultation papers move swiftly to actual regulations. We bring clarity, transparency and an ability to rate emerging regulatory changes to clients embracing this shifting landscape,” said John Byrne, CEO, Corlytics.

Impact-focused fintech Tumelo and environmental data analysis firm iClima Earth have collaborated to provide greater company-level transparency into funds. Using Tumelo’s API, the new feature enables users to view all individual companies inside each fund and ETF displayed on iClima’s website, providing objective information for each individual company. “The partnership shows the importance of transparency in facilitating impact and positive change. We are delighted to join forces with iClima to bring cutting edge transparency tools to encourage good stewardship and provide better and engaging experience for their users,” said Will Goodwin, Co-Founder of Tumelo. “The best way to reduce CO2 equivalent in the atmosphere is by not emitting in the first place. iClima develops investment research and equity indices based on this laser focus – the decarbonisation of the planet,” said Gabriela Herculano, Co-Founder of iClima.

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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