NEW YORK, November 17, 2021: S&P Dow Jones Indices, the world’s leading index provider, has announced the launch of the S&P 500 Equal Weight ESG Leaders Select Index. Based on the equal weighted version of the iconic S&P 500®, the new benchmark bridges the benefits of equal weight indices with a significant improvement in ESG performance from the parent S&P 500 Equal Weight Index.
"The launch of the S&P 500 Equal Weight ESG Leaders Select Index reflects the continued evolution of ESG investing by combining a smart beta factor – equal weight – into an ESG benchmark," said Margaret Dorn, Senior Director, Head of ESG Indices, North America, S&P Dow Jones Indices. "S&P DJI continues to expand its family of ESG benchmarks with a goal of further encouraging the adoption of sustainable business practices across all industries."
Index Methodology
Beginning with the S&P 500 Equal Weight Index as the eligibility universe, the new ESG index excludes companies involved in specific business activities, companies with disqualifying United Nations' Global Compact (UNGC) scores, companies with ESG controversies, and companies with S&P DJI ESG scores in the bottom 25% of each global GICS Industry Group.
The remaining eligible companies in each GICS Industry Group with the highest S&P DJI ESG scores are then selected for the index until as close to 40% of the constituent count from each Industry Group is reached. The result is an index that retains the equal weight benefits that factor-minded investors desire, but with an overall improvement in ESG score and a reduction in carbon intensity at the index level.
Quantifying the ESG Impact
Compared to the S&P 500 Equal Weight Index, the S&P 500 Equal Weight ESG Leaders Select Index has a wide range of measurable ESG impacts. For example:
- 23% higher exposure to companies that report quantifiable environmental indicators.
- 13% higher exposure to companies with targets and initiatives to reduce emissions.
- 21% higher exposure to companies that monitor and disclose female representation across their organization.
- 20% higher exposure to companies with publicly available anti-corruption policies.
S&P DJI has also entered into a license agreement with Invesco Capital Management to launch a US-listed ETF today tracking the S&P 500 Equal Weight ESG Leaders Select Index.
"Invesco is excited to continue its long partnership with S&P Dow Jones Indices, licensing the new ESG version of its equal weighting the S&P 500 Index to bring investors another choice in how they want to access the benefits of equal weight investing," said John Feyerer, Head of Innovation and Commercialization, ETFs & Indexed Strategies, Invesco.
