The new indexes reflect the rising trend of incorporating sustainable investment themes into Canadian fixed income index construction
The growth in demand for sustainable fixed income assets has prompted the launch of two new Canadian indexes.
FTSE Russell’s new index series consists of the first-of-its-kind, FTSE Canada Universe Ex-Fossil Fuels Bond Index Series and FTSE Canada Green Impact Bond Index Series.
For investors looking to calibrate their exposure to fossil fuels and pivot towards sustainable alternatives, the indexes aim to boost the information currently available in Canada.
The indexes use a transparent, rules-based approach to identify and screen issuers, and promises a “robust, distinctive approach to identify issuer’s business sustainability efforts and exposure to fossil fuels.”
The indexes are:
- The FTSE Canada Green Impact Bond Index Series has been designed to represent the performance of investment-grade, high-yield and Maple (CAD-denominated) green debt issued by Canadian governments, government agencies, and corporations. The Index Series helps investors align their portfolios towards improved environmental outcomes.
- The FTSE Canada Universe Ex-Fossil Fuels Bond Index Series is the first-of-its-kind in the Canadian fixed income market and is designed to track the performance of constituents of the FTSE Canada Universe Bond Index after the exclusion of companies whose revenue and/or reserve exposure to fossil fuels exceeds a set threshold, as investors increasingly look to calibrate their exposure to fossil fuels in their portfolios.
Marina Mets, head of Americas, Fixed Income and Multi-Asset Index Product Management at FTSE Russell, says the new SIFI indexes will be a valuable addition for investors.
“With rising investor needs for greater choice when it comes to managing fossil fuel exposure in portfolio, we have developed a thorough and rigorous methodology to enable climate-conscious investors to align their investment strategy, financial interests, and values,” she said. “We believe green and sustainable investing in the Canadian fixed income market will grow in the coming years as investors look for opportunities in Canada’s transition to a low carbon economy.”
