Solactive : Expanding access to 2°C-aligned investment opportunities: Solactive and right. based on science broaden set of options available to the investment community with triple launch
Timo Pfeiffer, Chief Markets Officer, at Solactive
As time to meet the international community’s goal of limiting global temperature rise to ‘well below 2°C’ is running out, the sense of urgency to address the issue is growing across the domains of public policy, regulation, and international financial market participants. In recognition of this development, Solactive and right. based on science (“right.”) are expanding the toolset available to investors with a triple launch of 2°C-aligned index solutions, complementing their existing line-up to now cover key regional investment universes: Developed Markets, Developed Markets ex US, US (new launches), and Europe (existing solution). All indices are powered by right.’s economic climate impact data.
right.’s X-Degree Compatibility (XDC) Model calculates the contribution of an economic entity to climate change until 2050 under various scenarios. Results are expressed as a tangible °C value allowing for simple portfolio construction based on a single, forward-looking metric.
Employing this data, the four Solactive right. 2 Degree-Aligned Indices select sector-leading companies in terms of alignment with a 2°C global warming scenario through 2050. All resulting portfolios are aligned with the International Energy Agency’s (IEA) 2DS and B2DS scenarios, translating to 2°C as well as 1.75°C alignments.
|Index||# Constituents 2°C-aligned Index||# Constituents Parent
|Solactive right. 2 Degree-Aligned Developed Markets Index||390||1588|
|Solactive right. 2 Degree-Aligned Developed Markets ex United States Index||282||1076|
|Solactive right. 2 Degree-Aligned United States Index||108||512|
|Solactive right. 2 Degree-Aligned Europe Index||244||600|
The reduced constituent count of the indices – in comparison to their respective parent index – highlights the current lack of 2°C-aligned business practice on a global scale, corroborating the sense of urgency expressed by public policy, regulators, and market participants alike.
Thus, the indices serve as monitoring tools to track the progress of the global community towards the ‘well below 2°C’ goal. Furthermore, they provide instruments for investors to focus on those companies already operating in line with this ambitious goal serving as potential underlyings for ETFs and structured products.
Timo Pfeiffer, Chief Markets Officer at Solactive, said: “Our expanded collaboration with right. does not only broaden the set of options available to our clients looking to build forward-looking, climate-aware investment strategies but also provides critical insight into global progress towards achieving our mutual goal of a ‘well below 2°C’ increase in global temperature.”
Dr. Sebastian Müller, Co-Founder of right. based on science, commented:“Our mission in creating the X-Degree Compatibility Model was to bring greater transparency to the market – not just on climate-related risks, but also opportunities. In partnering with Solactive to create these indices, we are achie