Press Release - Boston, London, Nice, Paris, Singapore, Tokyo, April 13, 2021
Scientific Beta launches unique series of pure climate indices that translates companies' climate performance and alignment engagement into portfolio decisions
The Climate Impact Consistent Indices (CICI) allow investors to promote real-world emissions reductions
Scientific Beta has announced the launch of a unique series of Climate Impact Consistent Indices (CICI) that make investment decisions and engagement practices consistent in order to maximise their impact.
The CICI offering is the only pure climate index offering on the market. Unlike traditional climate indices and benchmarks, which combine financial and climate criteria, either in the form of tilts applied to reference cap weights, or of carbon intensity score optimisation under tracking error constraints, the CIC indices make the weights of stocks depend solely on their climate performance. This strong methodological choice provides the CIC index with all of its consistency by avoiding financial considerations contradicting climate considerations.
CICI is positioned for implementing the recommendations of the Net-Zero investment coalitions at the portfolio-construction level. In particular, the Paris Aligned Investment Initiative (PAII) Framework states that one of the key elements of a "Paris aligned stewardship approach" is to develop an engagement strategy with a feedback loop to portfolio construction. CICI allows for the practical implementation of this approach where engagement and portfolio construction are neither mutually exclusive nor independent and instead can and should be mutually reinforcing. The CICI portfolio construction methodology thus greatly bolsters the power of an investor's engagement strategy by establishing its credibility thanks to the consistency between the actions that it undertakes to engage companies on better climate alignment, and the investment decisions with respect to the same companies.
Commenting on the launch of the CICI offering, Dr Noël Amenc, CEO of Scientific Beta, said, "The weighting approach at the heart of CICI maximises the possible synergies between portfolio construction and engagement. By putting their money where their mouths are, investors bolster the potential for successful engagement. In this respect, Scientific Beta's Climate Impact Consistent Indices not only align with ESG impact considerations but also promote real-world impact through a unique approach to portfolio construction."
About Scientific Beta:
Scientific Beta aims to be the first provider of a smart factor and ESG/climate index platform to help investors understand and invest in advanced factor and ESG/climate equity strategies. Established by EDHEC-Risk Institute, one of the top academic institutions in the field of fundamental and applied research for the investment industry, Scientific Beta shares the same concern for scientific rigour and veracity, which it applies to all the services that it offers investors and asset managers. On January 31, 2020, Singapore Exchange (SGX) acquired a majority stake in Scientific Beta. SGX is maintaining the strong collaboration with EDHEC Business School, and principles of independent, empirical-based academic research, that have benefited Scientific Beta's development to date. Since 2015, Scientific Beta has also been offering highly advanced strategies in the area of ESG and climate change, whether involving options integrated into smart beta indices or pure ESG or climate benchmarks. As a complement to its own research, Scientific Beta supports an important research initiative developed by EDHEC on ESG and climate investing and cooperates with V.E and ISS ESG for the construction of its ESG and climate indices.
Scientific Beta, 1 George Street, #15-02, Singapore 049145. For further information, please contact: contact@scientificbeta.com, Web: www.scientificbeta.com.