Introducing The S&P Sustainably Screened Index Series: A Mainstream Approach To Sustainable Investing

As a pioneer in the index space, S&P DJI has long understood the necessity for evolving indices to address the changing needs of the investor. In recent years, one significant development has been the growing focus on sustainable investing and an increased demand from investors to find strategies more in line with their value and belief systems.

In response to such demand, S&P DJI has looked to diversify the ways in which market participants can gain access to more sustainable investment strategies. The launch of the S&P ESG Index Series in January 2019 represented a momentous step in integrating ESG metrics and scores into the core of an investor’s portfolio. With the recent launch of the S&P Sustainably Screened Index Series, investors now have yet another opportunity to access broad market exposure to S&P DJI’s headline benchmarks—S&P 500®, S&P MidCap 400®, S&P SmallCap 600®—but in an even simpler way. Instead of screening companies by ESG scores and seeking to maintain industry neutrality to the benchmark index, the S&P Sustainability Screened Indices focus only on screening out companies with exposure to controversial business activities, regardless of how that might impact sector or industry composition.

The S&P Sustainably Screened Indices—S&P 500 Sustainably Screened IndexS&P MidCap 400 Sustainably Screened Index, and S&P SmallCap 600 Sustainably Screened Index—seek to exclude companies with specific fossil fuel reserves,1 as well as companies with involvement in controversial business activities widely accepted as conflicting with responsible investing practices (see Exhibit 1). A company’s level of involvement is defined via various revenue thresholds and eligibility criteria that determine the basis for which a company is excluded from the eligible universe. For example companies that are found to be involved in the manufacturing, sale, or distribution of assault weapons and/or small arms, as well as their key components, are deemed ineligible for inclusion in the index.2

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