Introducing the S&P Sustainable Development Goals Indices

Executive Summary

On Jan. 9, 2024, S&P Dow Jones Indices (S&P DJI) announced the expansion of its suite of sustainability-oriented indices with the launch of the S&P 500^® SDG Index and the S&P Global LargeMidCap SDG Index.  The indices are designed to offer market participants broad-based equity performance measurements and diverse exposures to companies that are collectively more aligned with the United Nations’ 17 Sustainable Development Goals (SDGs).

This paper:

• Explains the underlying data used for the index construction.
• Explains the construction of the S&P SDG Indices.
• Summarizes the historical results of the S&P SDG Indices relative to their respective underlying indices. This includes:
  • Improved index-level exposure to positively aligned SDG revenue.
  • Reduced index-level exposure to negatively aligned SDG revenue.
  • Increased index-level exposure to companies that have operational performance aligned to the SDGs (measured by the SDG operation score).
  • Reduced index-level greenhouse gas (GHG, expressed in CO₂ equivalents) emissions intensity.

Introduction

"The 17 Sustainable Development Goals (SDGs), which are an urgent call for action by all countries—developed and developing—in a global partnership. They recognize that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth—all while tackling climate change and working to preserve our oceans and forests.” The 17 goals are a result of more than a decade of work, with each goal encompassing a clearly stated objective and multiple measurable targets. While the SDGs were initially created as a shared roadmap for countries, they can also be used as a framework for investors. This is because the data allows for the identification and measurement of specific impact(s) that a company’s activities may have on both society and the environment—regardless of the financial materiality.

Resultingly, S&P DJI has designed a transparent index methodology which looks to provide investors with the opportunity to align their investments to the UN’s SDGs and deploy capital toward specific societal and sustainability-focused objectives.

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