Launched in April 2025, the S&P MidCap 400^® Scored & Screened Leaders Index provides a new benchmark for measuring the performance of companies with higher-than-average ESG scores while excluding companies that derive revenue from specified business activities, or are non-compliant with the United Nations Global Compact.

A Sizeable Market Segment

With a market capitalization larger than entire countries’ equity markets (see Exhibit 1), the S&P 400^® highlights the global relevance of U.S. mid caps. The S&P 400 may also offer distinct characteristics when compared to the S&P 500, including diversification from mega-cap companies and an emphasis on more domestically oriented sectors.¹

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Exclusions Follow a Rules-Based Methodology

The S&P MidCap 400 Scored & Screened Leaders Index is designed to maintain similar industry group weights to the S&P 400. As outlined in its methodology, companies are selected to target 50% of uncapped free-float market capitalization from each GICS^® industry group within the S&P 400 (see Exhibit 2). Selection is then based on the descending order of S&P Global ESG Scores, while excluding companies:

• In either the lowest 25% of ESG scores within the S&P MidCap 400 GICS industry group, or the lowest 10% of all ESG scores within the S&P MidCap 400.
• Involved in specific business activities deemed incompatible with sustainability goals (such as weapons, tobacco, coal and others).
• Failing to meet UNGC principles.
• Associated with significant ESG controversies.

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If exclusions prevent an industry group from meeting the 50% target, excess industry weight is distributed proportionately among remaining constituents. To mitigate single-stock concentration, a constituent cap is implemented according to the S&P Scored & Screened Leaders Indices methodology.

Industry Group Neutrality by Design

Exhibit 3 compares the GICS sector weights for the S&P MidCap 400 Scored & Screened Leaders Index with those of the S&P MidCap 400 as of May 31, 2025. The exhibit shows how the construction of the former resulted in similar sector weights to the latter, as demonstrated by an average sector weight difference of under 1.8%.

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Although not an objective of the S&P MidCap 400 Scored & Screened Leaders Index, the similarity in sector weights compared to the S&P MidCap 400 helps explain the similarity in their performance, with a 0.6% difference in annualized total return over the one-year period ending May 2025 (see Exhibit 4). Similar results were also observed over longer horizons. These metrics reflect a balance between diversified sector weights and selective ESG criteria, highlighting the index’s objective to measure aspects of sustainability and market representation.

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Conclusion

The S&P MidCap 400 Scored & Screened Leaders Index offers a fresh perspective on mid-cap equities by combining specific sustainability criteria with the core characteristics of the S&P MidCap 400, and it presents a tool for the U.S. mid-cap segment with sustainability features.

¹See Anguiano, Cristopher, “Beyond Large Caps: Exploring the S&P MidCap 400 and S&P SmallCap 600,” S&P Dow Jones Indices’ Indexology^® Blog, Feb. 18, 2025.

²For more information, see the S&P MidCap 400 Brochure here.

³For more information on S&P Global ESG Scores, please see here. For a more comprehensive understanding of the S&P Global ESG Scores methodology, please refer to the S&P Global ESG Scores Methodology.

⁴United Nations Global Compact. For more information on UNGC Principles, please see here.

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