The Rebalance Of Power: Tesla, Walmart, & Disney Join The S&P 500 ESG Index, Facebook, Wells Fargo, & Costco Dropped

ESG momentum shows no signs of stopping, with sustainable fund assets nearing USD 2 trillion, following record inflows in Q1.1 Pressure on firms to perform in sustainability rankings has never been higher, as Wall Street’s hottest topic gets hotter still. But what firms benefit from all this heat? From the assets flowing into S&P 500® ESG Index related products,2 it seems the balance of power may be shifting. At least for the foreseeable future, Sustainability is King (or Queen). So, by almost royal decree, here are the results of the 2021 S&P 500 ESG Index annual rebalance.

What’s changed? First, the methodology itself—with the introduction of a new thermal coal screen last September following public consultation. Even though the index still aims to offer a similar risk/return profile to the S&P 500, with sustainability enhancements—rather than reduce carbon exposure, per se – it experienced a welcome decrease of 12% in carbon intensity since the last annual rebalance.3

ADDITIONAL INDEX-LEVEL METRICS

A broader sustainability lens reveals that the index achieved an S&P DJI ESG Score improvement of 8% (at the index level), representing 23% of the overall ESG-improvement potential, given the sustainability characteristics of the starting universe.4 Within the underlying E, S, and G dimensions, the sustainable counterpart to the S&P 500 realizes numerous tangible enhancements, all while providing similarly broad U.S. equity exposure. Due to the depth and breadth of topics covered in the S&P Global Corporate Sustainability Assessment that underpins the S&P DJI ESG Scores, there are too many to demonstrate here, though a sample is provided in Exhibit 1. Such improvements are even more pronounced within industry groups, given the industry-specific nature of S&P DJI ESG Scores.5

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