Last updated: 05:58 / Wednesday, 24 November 2021
ESG investing

HSBC Launches the First Equity Indices that Screen Biodiversity

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  • The Euronext ESG Biodiversity Screened Index is the first series of investable biodiversity screened benchmark indices based on a broad range of equities
  • They have been jointly developed by HSBC, Euronext and Iceberg Data Lab
  • The series provide a benchmark for investors as to which stocks to include in their portfolios and which to exclude, based on how a company’s overall activities impact nature

HSBC has announced the launch of the Euronext ESG Biodiversity Screened Index series, jointly developed with Euronext and Iceberg Data Lab. The firm has explained in a press release that these are "the first investable biodiversity screened benchmark indices based on a broad range of equities".

Constituent companies of the Euronext ESG Biodiversity Screened Indices are selected from either the Euronext Eurozone 300 Index or Euronext World Index, using the following criteria: they are committed to the UN Global Compact Principles and are not involved in controversial weapons, tobacco production, or thermal coal extraction. Besides, their ESG Risk scores are determined by Sustainalytics, and their Corporate Biodiversity Footprint (CBF) score is calculated by Iceberg Data Lab, which assesses their impact on biodiversity from change of land use, greenhouse gas emissions, air and water pollution, taking into consideration their whole value chain.

"The Euronext ESG Biodiversity Screened Indices provide a benchmark for investors as to which stocks to include in their portfolios and which to exclude, based on how a company’s overall activities impact nature. They will also be able to invest in a range of products that track these indices. In this way, investors will have greater oversight of their portfolios’ ESG and biodiversity credentials", said Patrick Kondarjian, Global Co-Head of ESG Sales, Markets & Securities Services at HSBC.

Meanwhile, Marine de Bazelaire, Group Advisor on Natural Capital, highlighted that they are helping to develop business and investment models for enterprises that are finding ways to restore, manage and protect nature. "Biodiversity and ecosystems provide value to society in a myriad of ways such as food security, medicine, clean water, carbon removal and weather regulation. The decline in natural capital has been rapid and is ongoing", she added.

HSBC believes that COP26 has given added momentum to the importance of protecting biodiversity and achieving the goals set by the Paris Agreement: "More than 100 countries, which cover 85% of Earth’s existing forests, have now pledged to end and reverse deforestation by 2030". 

Regarding its business, the company points out that transition to net zero is one of its four strategic pillars. “We are putting nature and biodiversity at the heart of our net zero strategy because we believe that protecting and restoring nature is essential for a thriving global economy and a successful net zero transition,” commented Marine. In this sense, HSBC has committed to providing between US$750 billion and US$1 trillion in finance and investment by 2030 to support its customers across sectors to decarbonise and accelerate new climate solutions.

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