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This Week’s Tech and Tools News: Nature-Based Emissions Offset Futures Launched by CME Group

ESG Investor’s weekly round-up of news on technology and tools in the sustainable investing sector, including CME Group, Xpansiv, Bloomberg, MSCI, RepRisk, Longspur Capital, Radnor Capital Markets.

Global exchange operator CME Group will launch a Nature-Based Global Emissions Offset (N-GEO) futures contract in August, pending regulatory approval, to help create a more transparent and efficient voluntary emissions offset market. “More companies are relying on nature-based offsets as part of their overall climate strategies as the move to net-zero emissions continues to accelerate,” said Peter Keavey, Global Head of Energy at CME Group. “By offering a standardised mechanism for managing the price risk associated with those initiatives, our new N-GEO futures will provide the marketplace with an important tool to help navigate the ongoing energy transition.” N-GEO futures were jointly developed with Xpansiv market CBL, a global exchange platform for transacting in energy and environmental commodity products. Xpansiv launched the N-GEO spot contract earlier this year, basing it on eligible voluntary offsets from agriculture, forestry, and other land use projects with additional climate, community, and biodiversity (CCB) accreditation. “Following the rapid market adoption of the GEO, we launched the N-GEO in response to rising demand for nature-based solutions,” said Xpansiv President and COO John Melby. “It brings transparency and price certainty to a vital subset of the offset market, and N-GEO futures will further empower participants to meet climate commitments while promoting biodiversity and supporting developing communities.” The Nature-Based GEO futures will allow for delivery of eligible voluntary offset credits and will be listed by and subject to the rules of NYMEX. 

Data, analytics and index providers Bloomberg and MSCI have launched the Bloomberg Barclays MSCI Emerging Markets ESG Index Suite, consisting 10 ESG indices. These benchmarks incorporate ESG and SRI considerations in underlying hard and local currency emerging market fixed income indices. All three sets of indices are available in Global, Pan-Euro and US$ formats. The first, Bloomberg Barclays MSCI EM ESG Weighted Indices, utilise MSCI ESG Ratings to tilt issuer market weights. The second, Bloomberg Barclays MSCI EM SRI Indices, screen out issuers with substantial revenue derived from sources such as adult entertainment, alcohol, gambling, tobacco, controversial military weapons, civilian firearms, nuclear power, and genetically modified organisms. Bloomberg Barclays MSCI EM Sustainability Indices use Emerging Markets debt benchmark, including fixed and floating-rate US$, € and/or £-denominated debt issued from sovereign, quasi-sovereign, and corporate EM issuers with BB and above ESG ratings. “Investor demand for ESG considerations continues to grow, and we are consistently working to expand Bloomberg’s offerings to meet these requirements as ESG factors are increasingly incorporated into investors’ workflows,” said Chris Hackel, Index Product Manager at Bloomberg.  

ESG data science firm RepRisk has established a five-person academic advisory board to guide its research and deepen its academic relationships. The board will be charged with developing innovative thought leadership, bridging new theories and ideas in the academic space using RepRisk’s ESG dataset. Based on its transparent, rules-based methodology, RepRisk’s time series of metrics and analytics is generated point-in-time rather than reverse-engineered,” allowing for proper back-testing and to generate ESG alpha”. “We remain steadfast in our mission to drive responsible corporate behaviour and create positive change. Key to fulfilling that is enhancing and formalising our relationship with academia,” said Dr. Philipp Aeby, CEO of RepRisk. “Our new RepRisk Academic Advisory Board will convene some of the best minds in the field of ESG scholarly research to guide our work in this area, helping ‘kick the tyres’ of our datasets and ensure that our ESG risk data continues to remain best-in-class.” The mew board consists: Jeffrey Bohn, University of California at Berkeley; Rajna Gibson Brandon, University of Geneva; Andreas Hoepner, University College Dublin School of Business; Julian Kölbel, University of Zurich; and Aaron Yoon, Northwestern University, Kellogg School of Management. 

The Active Net Zero Clean Energy Index has been developed by clean energy specialist Longspur Capital and corporate adviser Radnor Capital Partners to identify and enable investment in the European clean energy companies most actively supporting transition to a net-zero carbon world. The firms developed their Active Net Zero methodology to evaluate companies based on their performance towards the energy transition in a systematic, transparent and repeatable framework, thus screening out companies that have made net zero pledges, but which have “yet to deliver material ‘green’ revenues or capex commitments”. The Active Net Zero Clean Energy Index represents the top 50 European clean energy and related companies that meet the methodology’s criteria, adjusted for market capitalisation and liquidity, from a universe of 137 European listed firms.  

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