Called Euronext CDP Environment France EW (FRENV), this index is composed of 40 components belonging to the 120 largest French stocks from the SBF 120.
An index based on environmental scoring
Stock selection is based on company’s performance regarding on the three main environmental challenges of climate change, water security and deforestation.
To do this, the promoters of this new index rely on an environmental scoring - ranging from A to F - which represents the average of a company scores for each of these three environmental challenges.
These scores are based on information disclosed through CDP, a UK-based, non-profit organization which aims to study the implications of climate change for the world’s principal publicly traded companies.
Launched on the initiative of Goldman Sachs
- Marine Abiad, Head of Distribution France at Goldman Sachs for Structured Products
The Euronext CDP Environment France EW index will be exclusively licensed to Goldman Sachs, who will use the index as the underlying for structured products for sale in the interbank market in France.
« This new index will allows for a diversification in the products offered to French retail investors because ESG themes are a central topic in our economy’s current development and a subject of growing concern and interest from investors », said Marine Abiad, Head of Distribution France at Goldman Sachs for Structured Products.
The index, equal weighted, will be calculated dividends reinvested with a deduction of 5% annual.
The reweighting of the constituents of the index will be quarterly while stock selection will be annual.
Responding to investor expectations
According to Laurent Babikian, Director of Investor Engagement at CDP Europe « this index marks a major milestone in delivering a selection of France’s biggest corporates who outperform the market across three critical themes of climate change, water and forests ».
It remains to be seen whether the performance will meet expectations for investors who want to be invested on top rated environmental firms.
