J.P. Morgan has launched a suite of global fixed income indices which incorporates environmental, social and governance (ESG) factors. The JP Morgan ESG index suite was launched in collaboration with BlackRock in response to the growing demand from fixed income investors. Rebalanced monthly, the indices will be weighted systematically so issuers with the strongest ESG score have their weights increased. What has been driving the boom in passive ESGproduct launches? Furthermore, the indices will screen out controversial sectors such as thermal coal, tobacco, weapons and any violator of the United Nations Global Compact (UNGC) principles. Gloria Kim, head of the global index research at J.P. Morgan, added: "Responsible investing is becoming the cornerstone of many of our clients' strategies and having access to a proper global fixed income benchmark that integrates ESG is essential. "We are pleased to help investors access ESG investments on a global scale through our new index lineup." MSCI: How does ESG impact the performance of companies? Sergio Trigo Paz, head of emerging market debt at BlackRock, added: "Sustainable investing is about investing in progress and pioneering better ways of doing business. "Strong ESG practices positively impact creditworthiness in the long-term, and up until now ESG in emerging market debt has been more bespoke and project-based, as opposed to providing solutions at scale. "Establishing these benchmarks will be instrumental in redefining the investment universe and setting an industry standard to help make ESG investment within EMD more broadly accessible to all investor types. This is a big step forward for emerging market investment."
The US bank has launched a suite of global fixed income indices featuring ESG factors in collaboration with the investment management firm. The move comes in response to increased demand from fixed income investors. “Global investors are increasingly looking for more diversified products and services that can help them manage their portfolios,” said John Mack, CEO of Morgan Stanley. The indices will also screen out sectors including thermal coal, tobacco, weapons and violators of the United Nations Global Compact principles.