Index provider FTSE Russell announced today the launch of the FTSE UK ESG Risk-Adjusted Index Series, rolling out a suite ESG adjusted variants of its flagship indices, including the FTSE 100, which tracks the largest 100 LSE-listed companies by market capitalization, as well as the FTSE 250, FTSE 350, and FTSE All-Share indices.

In a statement announcing the new indices, FTSE Russell said that the launch marks a “starting point for incorporating key ESG considerations into the flagship UK Series,” providing investors with exposure to broad ESG improvements while balancing index characteristics such as risk and return and tracking error.

Aled Jones, Head of Sustainable Investment Solutions at FTSE Russell said:

“Our aim with this launch is to fulfil client need in our ESG index product range, whilst also providing a straightforward ESG adjusted version of the flagship UK equity benchmark series, to support the growing range of implementation requirements that we see across our customer base.”

The series uses the FTSE Russell Target Exposure methodology to measure ESG performance, excluding companies involved in controversial weapons, thermal coal production, energy generation based on thermal coal, Arctic oil and gas exploration, oil sands and shale energy extraction and production, tobacco production and retail, and controversial conduct.

Key features of the new indices include a targeted 50% reduction in fossil fuel reserve exposure, as well as a 50% reduction in carbon emissions intensity, as well as an ESG score improvement target of 5% above aggregate benchmark FTSE’s ESG scores. FTSE Russell notes that UK companies generally achieve comparatively high ESG scores.

Arne Staal, CEO of FTSE Russell, said:

“We have created the FTSE UK ESG Risk-Adjusted Index Series to further increase the options for clients incorporating ESG and Climate objectives into UK equity portfolios. This launch, while continuing to expand our multi-asset ESG and climate index range, is also our first ESG adjusted version of the FTSE 100, and something our customers have been asking for.”

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