Euronext today announced the launch of a new suite of ESG-focused products, services and initiatives, designed to provide a robust framework of tools for European capital markets to fuel sustainable growth.
The firm said that today’s announcement represents a significant step forward in Euronext’s three-year strategic plan, “Let’s Grow Together 2022”, in which ESG was identified as a key strategic pillar.
Euronext also revealed it has partnered with Vigeo Eiris Moody’s to design a new ESG index, the Euronext Eurozone ESG Large 80, which tracks the Eurozone’s 80 best-performing Large Cap companies that are strong on social and governance criteria and leading the transition to a low carbon economy. This new index responds to investors’ need for a public climate action benchmark in the Eurozone.
On 1 June 2020, Euronext introduced its first futures derivatives contracts based on an ESG index. The ESG 80 futures provide effective hedging tools and allow more investors to gain exposure to the sustainable economy in the Eurozone. At launch, it is supported by four market makers, BNP Paribas, DRW, Optiver and Société Générale.
With its partners CDP, Carbone 4 and Vigeo Eiris Moody’s, Euronext announced that the Low Carbon 100, is now aligned with the current draft of EU regulation on low carbon benchmarks in conformity with the Paris Agreement objectives, whose framework is to be officially adopted later this year.
Through Exchange Traded Funds provided by BNP Paribas, the index provides investors with a ready-to-use tool to support the environmental objectives required by the Paris Agreement i.e. a 7% year-on-year reduction of CO2 emissions, a limit of 1.5°C global temperature rises by 2050 and exclusion of fossil fuel companies.
Euronext currently provides clients with a comprehensive range of over 40 ESG index families based on a transparent and rules-based selection process, with input from expert partners in their fields such as Carbone 4, CDP, ISS-ESG and Vigeo Eiris Moody’s.
Expanding Green Bonds to ESG Bonds
Capitalising on the success of the Euronext Green Bonds offering introduced last November, with almost 70% increase in the number of issuers since launch, Euronext is expanding this offering to other ESG-related bonds, including blue, social, sustainability and sustainability-linked bonds.
Euronext consolidates ESG bonds listed in multiple locations onto one highly visible section, thus providing a means for issuers to showcase their ESG credentials and for investors to rapidly identify ESG bonds. To date, 231 ESG bonds from 95 issuers are featured on the new Euronext ESG Bonds section.
Euronext has over €165bn of ESG bond issuances listed on its markets. €54.3bn of green bonds were listed on Euronext last year and represented almost one fifth of global green bonds issued in 2019, the firm stated.
Euronext noted that as investors increasingly factor ESG criteria into their investment strategies, the firm has developed a suite of solutions for listed companies through its Euronext Corporate Services offering. These tailor-made ESG Advisory services enable issuers to reach new investors by clarifying their ESG strategy for capital markets and building their ESG profile with relevant reporting and improved governance.
In January 2020, Euronext introduced a set of guidelines on ESG reporting for issuers. Drawing on recommendations from the UN Sustainable Stock Exchanges Initiative, the guidelines are designed to help listed companies structure their approach to ESG.
Bolstering the Blue Economy
As an Official Supporter of the United Nations’ Sustainable Stock Exchanges initiative since 2015, Euronext firmly commits to the UN’s “2030 Agenda for Sustainable Development”.
“Today is an important milestone in executing the ESG roadmap of our three-year strategic plan ‘Let’s Grow Together 2022’. Euronext can significantly advance the European sustainability agenda through its unique role in financing the real economy, connecting local economies with global capital markets. Our ESG product strategy ensures investors can deploy their capital efficiently and transparently to support high-impact projects and companies. Furthermore, we are proud to be the first stock exchange to endorse the UN Global Compact’s nine Ocean Principles. Protecting our oceans and supporting marine conservation will be vital to repairing our ecosystems and bolstering the Blue Economy,” Stéphane Boujnah, Euronext CEO and chairman of the managing board, said.