Bloomberg and MSCI have launched a suite of fixed income indices designed to meet the minimum standards of the European Union’s Paris-Aligned Benchmark (PAB).
The Bloomberg MSCI global, euro and US corporate Paris-Aligned indices combine the Bloomberg’s fixed income indices with MSCI’s climate data research and analytics for corporate bonds.
Each index has set a 50% reduction of absolute greenhouse gas – relative to the parent euro, US or global indices – followed by an annual 7.5% decarbonisation relative to the baseline emissions.
The indices will use an exclusionary approach to meet the decarbonisation targets, with the emissions threshold required to maintain compliance with the PAB to be published monthly.
Furthermore, the securities must be rated investment grade.
MSCI will be responsible for screening the holdings and will exclude securities involved in controversial weapons, tobacco producers, United Nations General Council Violations or those that make over 1% of revenue from thermal coal, 10% in oil and gas and 50% in power generation.
Chris Hackel, index product manager at Bloomberg, said: “As global investors increasingly seek to align with the transition to a low-carbon economy, it is imperative that asset managers and ETF issuers have reliable, data-driven indices that can help quantify climate-specific risks and opportunities.
“This joint offering provides the market with a transparent and systematic approach for investors to conform to global frameworks.”
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