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SGX launches four sustainability stock indices
THE Singapore Exchange (SGX) has launched four equity indices based on measurements of sustainability.
The indices will rely on assessments of environmental, social and governance (ESG) criteria by Sustainalytics.
The SGX Sustainability Index is the broadest benchmark, and will include all of the Singapore-listed companies that meet minimum liquidity and sustainability reporting requirements. Weighting is based on the value of each component's free float. The index currently has 84 constituents.
The SGX Sustainability Leaders Index comprises only the stocks in the SGX Sustainability Index that are ranked by Sustainalytics above the 50th percentile in their Asia-Pacific peer group and above the 25th percentile in their global peer group. Weighting is also based on the size of each stock's free float. The starting edition of the index has 24 constituents.
The remaining two indices are versions of the above two benchmarks in which weighting is determined not just by the size of the free float, but also by each counter's ESG score as determined by Sustainalytics. Those two benchmarks are the SGX Sustainability Enhanced and SGX Sustainability Leaders Enhanced indices.
"Investors across the globe are placing increasing importance on ESG, resulting in significant growth of assets under management allocated to ESG strategies and growing demand for transparent benchmarking tools," SGX chief executive Loh Boon Chye said in a statement. "SGX Sustainability Indices provide a transparent avenue through which investors can assess the sustainability practices of SGX-listed companies and identify ESG leaders in Singapore. They will also help to further profile SGX-listed companies with strong relevant credentials among a growing pool of ESG-aware international investors."