Stockholm (NordSIP) – The very first index that allows investors to capture the performance of investment-grade green bonds has been published. Licensed to Lyxor International Asset Management, the Solactive Green Bond EUR USD IG Index combines Solactive’s expertise in index development and calculation with Climate Bonds and global green bond data capabilities.
“We continue to see growing demand for indices underlying ESG-related investment solutions. Considering the success of the Solactive Green Bond Index, the new Solactive Green Bond EUR USD IG Index allows investors to gain exposure to the investment grade segment of the green bond market for the first time,” says Henning Kahre, Head of Research at Solactive AG in a press release.
Amid increased international efforts to channel capital towards environmentally friendly projects, the index launch is an attempt to answer global challenges posed by climate change. The green bond market, initially pioneered by the World Bank and European Investment Bank, has experienced a strong start in 2017, with a 7 billion Euro issue by the French government and Poland’s contribution late last year of the world’s first green sovereign bond.
More funds are likely to be dedicated to the provision of climate-friendly products and services in the future, not least due to
anticipated regulatory changes aimed at reducing fossil fuel dependence and consumption. Green bonds are rapidly evolving from being a niche market to a multi-billion dollar enterprise with ever-increasing liquidity.
“The launch of this Index is another sign of market maturity. As Institutional investor interest develops and the labeled market grows in the hundreds of billions annually, a rigorous, investment grade Index provides a strong foundation to assist major green bond based portfolio and capital allocation decisions,” comments Sean Kidney, CEO of Climate Bonds Initiative.
The index universe comprises all USD and EUR denominated investment grade bonds that have been defined as green bonds by the Climate Bond Initiative. To be included in the index, the amount outstanding must be at least EUR 300 million and USD 300 million for bonds denominated in EUR and USD, respectively, with time to maturity of at least 12 months.
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