New Climate Change 1.5°C Target Index Series meets the strict EU Paris Aligned Benchmark (PAB) requirements to help investors benchmark their investment portfolio’s carbon reduction targets
London and Santa Monica May 16, 2022 – Wilshire, a global investment technology and advisory company, today announce a collective launch with Nikkei, a major Japanese index provider and the parent company of the Financial Times (FT), and Hang Seng Indexes Company, the Hong Kong and mainland China index company, to bring to market the first in a series of indexes empowering investors to transition their investments towards a low-carbon and climate resilient economy.
Nikkei and Hang Seng Indexes Company chose to collaborate with Wilshire due to its strategic partnership with the FT and track record of creating the right tools to help investors make a meaningful impact when addressing Environmental, Social and Governance (ESG) risks within their investment portfolios.
The index methodology is constructed with the aim to meet stringent EU Paris Aligned Benchmark (PAB) standards, which facilitates investment into companies with the intent of targeting at least a seven percent reduction year on year. PAB requirements aim to limit the rise in global temperature to no more than 1.5°C compared to pre-industrial levels by holding asset managers to account to invest in a portfolio which is reducing carbon emissions in line with the Paris Agreement of 2015, a global mandate that was endorsed by 197 sovereign nations.
United, the three major index providers launch on May 30, 2022 regional indexes applying the index methodology. These are:
- FT Wilshire US Large Cap Climate Change 1.5℃ Target Index
- Nikkei225 Climate Change 1.5℃ Target Index
-HangSeng Climate Change 1.5℃ Target Index
Mark Makepeace, Chief Executive Officer of Wilshire, commented “We have a collective responsibility to identify and manage climate risks that lead to better long-term investment outcomes for our clients. I’m excited to be collaborating with leading companies like Nikkei and Hang Seng Indexes Company who share our vision and commitment to empower investors to move from climate takers to climate makers. Our climate index series is designed to help investors make informed decisions to redirect capital towards a low carbon and climate resilient global economy.”
President and CEO Tsuyoshi Hasebe of Nikkei Inc. commented as follows: “Nikkei is committed to the preservation of the environment and our planet. We are making efforts to do so with our news and commentaries, as well as through other activities herein Japan and abroad. The Nikkei 225 Climate Change 1.5℃ Target Index will offer opportunities for greater amounts of global investment capital to flow into the major Japanese corporations that are environmentally conscious. It will also support action to attain the goals of the Paris Agreement.”
Anita Mo, Chief Executive Officer at Hang Seng Indexes Company, said: “We are delighted to join hands with Wilshire to broaden the variety of our product suite to align with the carbon neutrality objective of the Paris Agreement. The launch of the Hang Seng Climate Change 1.5°C Target Index will help investors with awareness of climate risks to integrate climate action factors into investment strategy to reduce portfolio exposure to risks related to climate change and reach a net zero goal.”
How can investors use the new indexes?
Wilshire, Nikkei and Hang Seng Indexes Company invite investors and asset managers to license the new indexes for:
- Issuing index-linked products
- Developing passive investment strategies
- Benchmarking investment performance for climate-related strategies
- Strategic asset allocation guidance
Climate Change 1.5℃ Target Index methodology
Constructed with the target to align to the minimum standards of the EU Paris-aligned Benchmark which requires the constituents of a portfolio to:
- At least a 7% on average annual reduction in greenhouse gas (GHG) emissions
- At least a 50% reduction in GHG emissions intensity compared to the underlying index
- Incorporates the EU Taxonomy "Do No Significant Harm" (DNSH) criteria to provide an additional screening option of green exposure.
Remaining constituents are then weighted based on their Greenhouse Gas (GHG) Emission Intensities.
- Constituents with lower GHG Emission Intensities will have an increased weight in the Index, while those who have higher intensities will have a reduced weight.
Wilshire is a global provider of market-leading indexes, advanced analytics, and multi-asset investment solutions. A trusted partner toa diverse range of more than 500 institutional investors and financial intermediaries, our clients rely on us to improve investment outcomes for a better future. Wilshire is headquartered in the United States with offices worldwide and advises on over $1.3 trillion in assets, $97 billion of which are assets under management.
More information on Wilshire can be found at www.wilshire.com
Nikkei is a world-renowned trusted provider of business news and information for Asian markets. Founded as a market news media company in Japan in 1876, Nikkei has grown into one of the world’s largest media corporations, and it acquired the U.K.-based Financial Times in 2015. It has 37 foreign editorial bureaus and approximately 1,500 journalists worldwide, with a combined digital and print circulation totalling over 3 million. Nikkei has conducted its stock index business for a long time, with its flagship “Nikkei Stock Average”(Nikkei 225) index being globally recognized as the most essential Japanese equity index. Derivative products of Nikkei 225 such as ETFs and futures are listed worldwide.
About Hang Seng Indexes Company Limited
Hang Seng Indexes Company Limited (‘Hang Seng Indexes Company’) manages and compiles the Hang Seng Family of Indexes, which cover stocks listed in Hong Kong and Mainland China. Our index series includes the Hang Seng Index, the Hang Seng China Enterprises Index and the Hang Seng TECH Index, as well as Stock Connect, Greater Bay Area and sector-related indexes. Currently, the Hang Seng Family of Indexes comprises over 1400 real-time and daily indexes with global presence in 33markets. Going forward, Hang Seng Indexes will continue to broaden its index series to meet the widening spectrum of investor demand for index investment solutions. Hang Seng Indexes Company is a wholly owned subsidiary of Hang Seng Bank. For further information on the Hang Seng Family of Indexes, please visit www.hsi.com.hk
Contact: Amy Bradford
T +1 805 256 5674
The index outperformed a -0.82% monthly return for the HFRX Global Hedge Fund Index
Wilshire estimates 0.6 percentage point increase in aggregate funded ratio for U.S. corporate pension plans in October.
Wilshire has been applying highly tested theories and approaches to our client solutions since 1981.
You can count on our team of experts to help improve investment outcomes for a better future.