May 22, 2023

Serving two purposes: ESG and Investment Return

ESG indices outperforming traditional Japanese market cap indices

ESG indices extending outperformance over traditional market cap indices

Both the FTSE Blossom Japan Index and FTSE Blossom Japan Sector Relative Index outperformed the traditional FTSE Japan All Cap Index by 115bp and 136bp respectively. As the analysis shows, the outperformance was attributable to stock selection effect supported by Size factor and Residual factor that represents non-traditional factors such as ESG. 

The latest Japanese ESG indices and passive investment report, written in collaboration with SGX

Each quarter, we review the development of Japan's sustainability standards, the ESG performance of Japanese listed companies compared to the broad-market index and the growth of index-linked SGX FTSE Blossom Japan Index Futures.

Key highlights from this quarter’s analysis:

  • Q1 2023 was another strong quarter for FTSE Russell’s Japan ESG flagship index series.
  • The outperformance of the FTSE Blossom Japan Index Series over the traditional market cap index is attributed to the stock selection effect.
  • Record open interest of US$ 105M on the SGX FTSE Blossom Japan Index Futures, making it the leading listed derivatives solution on the FTSE Blossom Japan Index.

You can read our Q4 2022 report Growing focus on ESG in Japan: Disclosure, outperformance and roll costs and our Q3 2022 report Ecosystem Growth: Japanese ESG indices and passive investing blossom.