Citi has launched a suite of equity benchmarks which negatively screens against ESG risks while also leaning towards companies offering a ‘best-in-class approach’ to ESG.
The Citi ESG World Indices have been created using ESG ratings provided by data and analytics company Arabesque.
According to the firm’s website, its ESG ratings system Arabesque S-Ray applies a quantitative approach to ESG information and measures the sustainability of publicly listed global equities. It provides four lenses to assess corporate sustainability performance; GC score that assess companies based on the principles of the UN Global Compact; an ESG score which evaluates a company’s performance on ESG topics that are financially material to the business; a temperature score that quantifies how corporates are contributing to the rise in global temperatures through their greenhouse gas (GHG) emissions; and finally a preference filter that checks a business’s involvement in certain controversial activities.
Citi said the indices were developed following conversations with clients around the globe and the result is a “globally diverse equity index family, which is rules-based and provides a benchmark for the next wave of ESG-focused thematics”.
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Harlin Singh, head of sustainable investing for Citi Private Bank, said: “2020’s events accelerated interest in ESG across the private wealth landscape: from family offices to foundations, and non-profits to individuals. Our clients have told us they are seeking differentiated opportunities that move beyond simple negative screening and strategies which aim to capture outperformance as a result of their ESG attributes.”
Michele Cancelli, global head of Citi Investment Strategies Trading and Structuring, commented: “We consistently develop new ways to bring innovative and topical index solutions to our global client base. The Citi ESG World Index family represents exposure to a theme which is at the forefront of many investors’ minds.
“In addition to showcasing Citi’s strong index construction capabilities, these indices also highlight our ability to collaborate with market leading platforms, such as Arabesque, to support our aim of delivering best-in-class solutions to investors.”