FTSE Russel Expands Asian ESG Rating Coverage

    Stockholm (NordSIP) –  FTSE Russell announced it had expanded the coverage of its Asian-Pacific ESG ratings to a total of 4,300 securities. This headline figure includes approximately 800 China A Share companies for a total of 1,800 Chinese securities as well as a total 1,300 companies in Japan, including small-caps. Following these developments, FTSE Russell covers 7,200 securities globally.

    FTSE Russell’s bases its ESG Ratings on two underlying parts: the Pillar and Theme Exposures and Scores. Over 300 individual indicator assessments that are applied to each company’s unique circumstances to calculate the Pillars and Themes. Eligible companies are each given an ESG Rating ranging from 0 to 5; with 5 being the highest rating. According to FT Russell, its ESG Ratings service allows investors to align their holdings with the UN SDGs, such that all 17 SDGs reflected in the 14 Themes under the ESG framework.

    Announced as part of the 2018 FTSE Equity Country Classification Review, China A Shares have been phased into the FTSE Global Equity Index Series (FTSE GEIS) as a Secondary Emerging market since June 2019.

    The extension of Japanese coverage onto small caps is motivated by local investor demand to incorporate sustainable investments into their portfolios, according to FTSE Russell. This demand has led to the creation of the FTSE Blossom Japan Index, which uses FTSE Russell’s innovative ESG Ratings data model. The index was selected by The Government Pension Investment Fund (GPIF) of Japan as a core ESG benchmark through its flagship fund.

    “We are delighted to expand our coverage in China and Japan, a mark of FTSE Russell’s ongoing commitment to the Asia-Pacific markets,” says Jessie Pak, Managing Director, Head of Information Services Asia Pacific, LSEG. “Market participants across the globe are increasingly looking to incorporate sustainable investment approaches into their investment philosophy and active and passive strategies. Our detailed, structured and transparent ESG Ratings and data model demonstrate a clear standard for market participants and companies to utilise in their ESG stewardship and engagement efforts.”

    Earlier this year, FTSE Russell announced with the inclusion of Australian small-cap securities in the FTSE Russell’s ESG research universe, bringing the number of Australian securities covered to approximately 280.

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    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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