May 24, 2023

A Paris-Aligned Corporate Bond Benchmark

We provide an overview of the EU’s regulatory framework for Paris-aligned and Climate Transition Benchmarks, before interpreting its implications for fixed income investors. Following this, we look in detail at the challenges around the application of forward-looking metrics, the data gap and the large number of private issuers within fixed income universes.

We address FTSE Russell’s approach to tackling these challenges and the implementation of an index design that is flexible and continues to evolve, introducing the FTSE Fixed Income EU Climate Benchmarks Index Series, a set of climate corporate bond benchmarks.

Points of differentiation:

  • Forward looking metrics: our exclusive partnership with the Transition Pathway Initiative (TPI) allows us to use data that assesses companies' preparedness for the transition to a low carbon economy.
  • Inclusive approach: our innovative approach addresses a 'no data gap', allowing us to be more inclusive in the methodology.
  • Going beyond EU requirements: we go beyond the minimum requirement of EU Climate benchmarks increasing exposure to green bonds, cap exposure to banks and extending our exclusions to oil sands.
  • Flexibility: index users will have various requirements, and the FTSE Russell toolkit provides flexibility in customisation to meet competing objectives (while ensuring indices remain within the EU regulation PAB/CTB definition).

Webinar - How to align fixed income and equity portfolios with the Paris climate goals

Our panel of FTSE Russell experts look at how fixed income and equity portfolios can be aligned with the Paris climate goals and discuss:

  • The EU’s regulatory framework for Paris-Aligned and Climate Transition Benchmarks.
  • The challenges of aligning fixed income portfolios with the Paris agreement.
  • Our exclusive partnership with the TPI, which allows us to use data to assess companies’ climate preparedness.
Watch the webinar now