ESG index solutions

Today, there are more and more ESG indices. Unfortunately, the calculation of ratings or indices is still very vague and subject to subjectivity. Several studies have shown the "green washing" side of these indices. For example, about 20% of the Bloomberg Barclays MSCI Green Bond index would be compatible with the future Green Bond standard (Sources: Environmental Finance and MSCI). Another study (ISS ESG and Adelphi, 2020) shows that only 2% of the Euro Stoxx 50 and the CAC 40 are compatible with the European taxonomy, and 1% for the DAX.

The European Commission has created two climate indices aimed at reallocating capital to a low-carbon, climate-resilient economy: 

• Paris aligned benchmark (+2°C): an "index labelled as a benchmark aligned with the EU Paris strategy. I.e., whose underlying assets are selected in such a way that the GHG emissions of the resulting benchmark portfolio are aligned with the Paris climate agreement and is also constructed in accordance with the minimum standards set out in the delegated acts".
• Climate transition benchmark: an index whose underlying assets are selected, weighted or excluded so that the resulting benchmark portfolio is on a decarbonization path and is also constructed in accordance with the minimum standards set forth in the delegated acts. 

ESG index solutions

Several products can be built from ESG indices. There are the classic product formats:

• ETFs and funds;
• structured products and certificates;
• derivative products.

Societe Generale solutions

Societe Generale's range of indices covers a wide range of asset classes, and includes ESG (Environmental, Social and Governance) indices, based on the Group's internal ESG research or on our extensive network of ESG partners. These products can be based on existing indices or on indices customized to clients' needs. These indices are designed to meet an investor's specific objectives.