European ESG derivatives tool unveiled

Based on the S&P Europe 350 ESG Index

Derivatives firm CME Group has launched an index futures contract based on the S&P Europe 350 ESG index.

Subject to regulator approval, the E-mini S&P Europe 350 ESG Index futures is a targeted risk management tool allowing investors to capture benchmark European equity exposure while integrating ESG.

The S&P Europe 350 ESG Index is a broad-based, market-cap weighted index covering 15 countries and that incorporates S&P DJI ESG Scoring. The four largest individual country weights as at 8 April 2021 were UK 23.6%, France 18.1%, Switzerland 17.2%, and Germany 14.9%. It is considered compliant with Article 8 of the SFDR and uses the same methodology as the S&P 500 ESG Index.

“Interest in ESG strategies continues to increase as financial institutions incorporate sustainable investing objectives into their trading strategies,” said Tim McCourt, CME Group global head of equity Index and alternative investment products. “Futures products can be an important part of the solution. This latest addition to our ESG offerings will allow market participants in this region to gain exposure to a European index based on a robust ESG methodology – all to meet their risk management needs.”

Reid Steadman, global head of ESG at S&P Dow Jones Indices, added: “S&P Dow Jones Indices is proud to be a part of the CME Group’s launch of E-Mini futures based on our S&P Europe 350 ESG Index. We are excited that the ecosystem of financial products linked to our ESG indices is growing and diversifying as more investors incorporate sustainability targets in their strategies.

“CME Group’s E-mini S&P Europe 350 ESG Index Futures complements the successful launch in the US in 2019 of E-Mini futures tied to our S&P 500 ESG Index, enabling us to bring ESG principles to a broader group of global market participants.”

E-mini S&P Europe 350 ESG Index futures will begin trading on 24 May and will be cash-settled in euros.

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Natalie Kenway

Natalie is global head of ESG insight for ESG Clarity and has been an investment journalist for 16 years. She won Editor of the Year at the Aviva Investors Sustainability Media Awards 2021, and was Winner...