FTSE Russell launches sustainable investment fixed income indices

FTSE Russell has launched a new set of sustainable investment fixed income indices (SIFI). These SIFI indices are designed for investors seeking to integrate their sustainable investment strategy into their fixed income investments.

The newly announed FTSE Fixed Income Global Choice and Fixed Income Excluding Fossil Fuels Enhanced index series use a methodology inspired by their equity counterparts, the FTSE Global Choice series and the FTSE Ex Fossil Fuels series, bringing consistency across equity and fixed income.

Scott Harman, global head of fixed income at FTSE Russell explained that the new index launches address the growing trend of integrating sustainable investment themes into fixed income indices.

The FTSE Fixed Income Global Choice series has been designed to represent the performance of securities in FTSE Fixed Income indices that exclude issuers based on their conduct or product involvement in specific sectors. The series helps investors align their portfolios with their individual values by selecting issuers based on the impact of their conduct and products on society and the environment.

The FTSE Fixed Income ex Fossil Fuels Enhanced series is designed to represent the performance of securities in FTSE Fixed Income indices after the exclusion of issuers that have certain exposure to fossil fuels.

The FTSE Impact Bond series enables global debt investors to participate in the rapidly growing green, social, and sustainable (GSS) bond market. Impact bonds have greater transparency in their use of proceeds and project impacts, providing a vehicle for investors who are looking for investments which yield direct climate, environmental or social benefits.

Harman said: “Our new FTSE Russell SIFI indexes address a growing need for sustainable investment solutions in the fixed income market. As investors look to align their portfolios with their ESG values, we have developed a thorough methodology to enable investors to exclude issuers based on their conduct or product involvement in specific sectors. Our experience in the equity market has allowed us to develop a methodology inspired by our FTSE Global Choice and FTSE Ex Fossil Fuel series, bringing consistency for investors across our equity and fixed income offering.

“We believe sustainable investing in the fixed income market will accelerate in the coming years, becoming mainstream and making it more challenging to hold portfolios without at least a basic sustainability element.”

A new FTSE Russell paper, Sustainable Investment: Not Just an Equity Game, explores the role of sustainable investment in the global securities market’s largest asset class, fixed income. The report notes growing investor demand for this type of solution, investigates the challenges in implementing a sustainable approach in fixed income, looks at the potential impact of sustainability on a portfolio’s risk/return profile and describes FTSE Russell’s approach to implementing sustainability in fixed-income indices.