Bloomberg and MSCI Launch Corporate Paris-Aligned Indices04.20.2022
Bloomberg and MSCI announced the launch of the first indices in their joint Climate Benchmark offering with the Bloomberg MSCI Global, Euro and US Corporate Paris-Aligned Indices. These indices will serve as a benchmark for investors to assess the performance of corporate bond holdings that seek to meet or exceed the minimum standards of the EU Paris-Aligned Benchmark (PAB) label.
The indices combine Bloomberg’s extensive fixed income indices family with MSCI’s Climate data, research, and analytics for investment-grade, fixed-rate, and global, US or EUR-denominated corporate bonds. To ensure they meet the minimum PAB criteria, each index sets an initial 50% reduction of absolute greenhouse gas (GHG) relative to the standard Bloomberg parent (Euro, US, or Global) corporate index, followed by an annual 7.5% decarbonization relative to the baseline emissions. These emissions reductions are achieved by excluding the largest GHG emitting companies.
“As global investors increasingly seek to align with the transition to a low-carbon economy, it is imperative that asset managers and ETF issuers have reliable, data-driven indices that can help quantify climate-specific risks and opportunities,” said Chris Hackel, Index Product Manager, Bloomberg. “This joint offering provides the market with a transparent and systematic approach for investors to conform to global frameworks, and we look forward to working with clients to further customize off the foundation of these benchmarks to fit their individual investment strategies.”
The indices use an exclusions-based approach to achieve the required decarbonization trajectory. The monthly exclusions process will establish the emissions threshold required to maintain compliance with the PAB label decarbonization trajectory for the following month.
“These Climate Fixed Income Indexes from MSCI and Bloomberg will enable investors to utilize MSCI’s industry-leading climate data while aiming to align with the Paris Agreement requirements of limiting global warming to no more than 1.5°C,” said George Harrington, Managing Director & Global Head of Fixed Income & Derivatives, MSCI.
Bloomberg clients can access the indices on the Terminal using the following tickers: I37017 Index <GO> for the Bloomberg MSCI Global Corporate Paris-Aligned Index, I37023 Index <GO> for the Bloomberg MSCI Euro Corporate Paris-Aligned Index, and I37024 Index <GO> for the Bloomberg MSCI US Corporate Paris-Aligned Index.
First quarter issuance was above $200bn despite unfavourable conditions for fixed income.
The collaboration increases access to corporate bond liquidity.
The acquisition was announced on 4 May 2022.
Market conditions have been unfavourable for primary issuance.
European trading in fixed income instruments is highly fragmented and non-transparent.