Thomson Reuters, the world's leading source of intelligent information for businesses and professionals, has launched a new family of environmental, social and corporate governance (ESG) indices. The Thomson Reuters Corporate Responsibility Indices were developed jointly with S-Network Global Indexes, a New York based specialist index design firm, as an objective and transparent, rules-based benchmarking solution for measuring ESG performance. Thomson Reuters Corporate Responsibility Indices support Thomson Reuters vision to connect and enable the global financial community. They rate companies' performance and practices in the three key pillars of CSR investing: environmental, social and corporate governance practices. Unlike the majority of ESG indices, the indices mirror the performance of major global benchmarks via companies that have substantially higher ESG ratings than the weighted average for such indices as the S&P 500 or MSCI EAFE.
"Responsible investing is rapidly becoming central to the investment processes of large-scale owners of capital around the world, and these indices serve as rational benchmarks for measuring ESG performance," said Jason du Preez, global head, indices and symbology at Thomson Reuters.
The new indices are powered by "dynamic" ratings based on the Thomson Reuters ASSET4 ESG database. The Thomson Reuters Corporate Responsibility Indices employ a large array of indicators, each having different levels of importance depending on the industry, country and regional focus of a company's operations. The ratings include a greater emphasis on quantitative outcomes than on qualitative corporate statements to ensure the indices are as objective and transparent as possible.
The top ESG rated companies from each sector are included in the indices, which do not use negative screening to exclude certain industries. Thomson Reuters believe that this process results in more accurate and diversified benchmarks.
According to the United Nations Principles for Responsible Investment (UN PRI), over $3 trillion in financial assets are managed by signatories of the UN PRI's framework. Adherence to ESG principles is widely regarded as a key indicator of the sustainability of companies' business practices.
How will these new indices affect corporate treasury? Is this another pressure on the corporate treasury department? Time will tell, but, for sure, the pressure for responsible investing is growing everywhere.
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