Stockholm (NordSIP) – Deutsche Bank has partnered with Frankfurt-based index provider Solactive to launch Solactive Sustainability Index Europe, an index specifically designed to track environmentally and socially responsible European companies.
“The Solactive Sustainability Index Europe allows investors to gain access to ESG-compliant companies, while minimising the overall portfolio risk, achieved thanks to volatility optimisation,” commented Solactive AG Head of Research Timo Pfeiffer.
“We are thus combining two of the most sought-after concepts in capital markets with a clear value-add for investors.”
The index uses the Arabesque S-Ray, a tool developed by asset manager Arabesque whose algorithm uses self-learning quantitative methods to process vast data sets to determine where companies’ behaviour corresponds to the normative principles of the United Nations Global Compact. Last year, Arabesque Director of Sustainable Investing Maria Mähl spoke to NordSIP about the workings and philosophy of the S-Ray platform.
“What is interesting when you look at quantitative analysis, is that it is rules-based. There are no biased perceptions,” Mähl said. “We are using it almost as a mirror, to see what the world is saying about a particular company, not to reflect what our biased view of that company is. We know that the valuation of stock prices depends on what people’s perception is.”
For the purposes of the Solactive Sustainability Index Europe, ESG criteria is embedded in the analysis, which can be used by investors interested in sustainable and socially responsible investment to screen future investments.
“[M]ore than ever before, investors are asking for a greater transparency around the sustainability of the companies they invest in.” Arabesque Head of ESG Research said in a comment to the launch of the Solactive Sustainability Index Europe.
Solactive itself launched the very first index (licensed to Lyxor AM) allowing investors to capture the performance of investment-grade green bonds, the Solactive Green Bond Index, a year ago.
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