Bursa Malaysia Launches ESG Indices with FTSE Russell

Bursa Malaysia Launches ESG Indices with FTSE Russell

Bursa Malaysia Berhad launched two new ESG themed indices under the FTSE Bursa Malaysia Index Series which are the FTSE Bursa Malaysia Top 100 ESG Low Carbon Select Index (FBM100LC) and the FTSE Bursa Malaysia Top 100 ESG Low Carbon Select Shariah Index (FBM100LS).

These new indices add to the existing portfolio in the FBM Index Series suite that the Exchange jointly issues with index partner FTSE Russell. These additions expand the Exchange’s benchmarking offerings in the ESG, low carbon and climate risk index space to cater to evolving investors’ demand.

The FBM100LC Index tracks companies in the FBM Top 100 Index based on their ESG and carbon intensity performance, thus providing an opportunity for investors to reduce their investment portfolio’s carbon footprint.

The index methodology addresses ESG and climate change risks from multiple dimensions based on clear, transparent and targeted objectives. It is constructed using the FTSE Russell Target Exposure methodology, which applies succussive tilts to capture target exposure and climate outcomes.

The index aims to achieve a maximum 30% reduction in Fossil Fuel Reserves Intensity, 30% reduction in Carbon Emissions Intensity, and 20% uplift in ESG Ratings. It excludes companies involved with controversial product activities such as weapons, thermal coal, extraction and electricity generation, tobacco, nuclear power, gambling, adult entertainment, and companies involved with controversies related to the UN Global Compact principles.

“We are delighted to expand on our strong partnership with Bursa Malaysia to bring these new ESG themed indices to the market. As sustainable investing continues to be embraced in Malaysia, the new indices provide a powerful tool for investors to increase company ESG transparency and performance,” said Helena Fung, Head of Sustainable Investment, Asia Pacific at FTSE Russell.

The launch of the index aims to further encourage ESG and low carbon adoption within the local capital market ecosystem, in line with the Exchange’s vision to be a leading sustainable and globally connected marketplace.

“ESG has become a staple of the investment management landscape. Clients have started to demand products that make it easier for them to manage their portfolios with better ESG compliance and risk management,” said Datuk Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia. “We are pleased to again partner with a respected name like FTSE Russell to develop new products that emphasize our commitment towards a low carbon economy.”

A Shariah version of the index is available where further screening is applied on the constituents to only include Shariah-compliant companies.

Source: Bursa Malaysia

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