September 29, 2021

FTSE Russell launches new Russell US ESG Indexes based on flagship US equity benchmarks

  • FTSE Russell introduces six Russell ESG indexes for investors seeking an ESG index that performs like the benchmark
  • Based on the Russell 1000, 2000 and 3000 benchmarks, the indexes use screens to ensure that specific controversial business operations are eliminated

- Target exposure methodology ensures risk/return characteristics similar to the underlying benchmarks

FTSE Russell, a leading global index, data and analytics provider, has launched the Russell US ESG Indexes, designed to integrate ESG into institutional-grade US equity indexes. The six new indexes are constructed using robust ESG screening criteria and the target exposure methodology ensures they closely match risk and return characteristics of the underlying benchmarks. FTSE Russell’s target exposure approach provides a transparent mechanism for exercising complete and precise control over both investability and ESG objectives.

Based on FTSE Russell’s widely used US equity benchmarks, the Russell 1000, Russell 2000 and Russell 3000 indexes, the new index series contains two sub-groups: the Russell ESG Screened Target Exposure Indexes and the Russell ESG Enhanced Target Exposure Indexes. Currently, the Russell US indexes capture 98% of the US investable market capitalization and are tracked by USD 10.6 trillion in passive and active funds.

The ESG Screened versions are for investors who want to remove harmful products or controversial activities and still maintain broad US market exposure. The ESG profile of the underlying index is improved by eliminating exposure to companies involved in the following business operations: Controversial Weapons, Firearms, Tobacco and Fossil Fuels. In addition, companies with the highest ESG controversies are excluded.

The ESG Enhanced versions are designed for investors seeking ESG score enhancement alongside the risk and return characteristics of the underlying benchmark. These indexes not only remove exposure to the same set of controversial business operations as the screened versions, but also incorporate sustainability issues by targeting specific ESG score improvement versus the benchmark. The ESG Enhanced indexes use Refinitiv ESG scores, an innovative framework that measures a company’s ESG performance, commitment and effectiveness relative to its industry peers.

Tony Campos, Head of Sustainable Investment, Americas, FTSE Russell, said:

“When it comes to sustainable investment, choosing an appropriate index truly matters. The Russell US ESG Indexes was developed for investors looking to incorporate sustainability considerations within a broad market portfolio without impacting the risk and return characteristics of the headline benchmark. Moreover, the two sub-groups were constructed with different client use cases in mind, giving investors options based on their preferences for ESG.”

Soaring investor interest in ESG has translated to a growth in assets in the US, with up to $550 billion AUM now in ESG/SRI funds, an 88% increase since 2018, leading to new index developments, sustained inflows into passive ESG funds, and the mainstreaming of ESG into passive investing. The Russell US ESG indexes can be used by market participants to benchmark the performance of active ESG funds; as a replacement for core market cap weighted passive portfolios; as a building block in model portfolios; and in the creation of ETFs, structured products and index-based derivatives.

The range of indexes includes:

  • Russell 1000 ESG Enhanced Target Exposure Index
  • Russell 2000 ESG Enhanced Target Exposure Index
  • Russell 3000 ESG Enhanced Target Exposure Index
  • Russell 1000 ESG Screened Target Exposure Index
  • Russell 2000 ESG Screened Target Exposure Index
  • Russell 3000 ESG Screened Target Exposure Index

For further information:

Global Media

Jelena Nedelka: jelena.nedelka@lseg.com | +1 929 228 6987

About FTSE Russell

FTSE Russell is a global index leader that provides innovative benchmarking, analytics and data solutions for investors worldwide. FTSE Russell calculates thousands of indexes that measure and benchmark markets and asset classes in more than 70 countries, covering 98% of the investable market globally. 

FTSE Russell index expertise and products are used extensively by institutional and retail investors globally. Approximately $16 trillion is currently benchmarked to FTSE Russell indexes. For over 30 years, leading asset owners, asset managers, ETF providers and investment banks have chosen FTSE Russell indexes to benchmark their investment performance and create ETFs, structured products and index-based derivatives. 

A core set of universal principles guides FTSE Russell index design and management: a transparent rules-based methodology is informed by independent committees of leading market participants. FTSE Russell is focused on applying the highest industry standards in index design and governance and embraces the IOSCO Principles. FTSE Russell is also focused on index innovation and customer partnerships as it seeks to enhance the breadth, depth and reach of its offering. 

FTSE Russell is wholly owned by London Stock Exchange Group. 

For more information, visit www.ftserussell.com.

© 2021 London Stock Exchange Group plc and its applicable group undertakings (the “LSE Group”). The LSE Group includes (1) FTSE International Limited (“FTSE”), (2) Frank Russell Company (“Russell”), (3) FTSE Global Debt Capital Markets Inc. and FTSE Global Debt Capital Markets Limited (together, “FTSE Canada”), (4) FTSE Fixed Income Europe Limited (“FTSE FI Europe”), (5) FTSE Fixed Income LLC (“FTSE FI”), (6) The Yield Book Inc (“YB”) and (7) Beyond Ratings S.A.S. (“BR”). All rights reserved.

FTSE Russell® is a trading name of FTSE, Russell, FTSE Canada, FTSE FI, FTSE FI Europe, YB and BR. “FTSE®”, “Russell®”, “FTSE Russell®”, “FTSE4Good®”, “ICB®”, “The Yield Book®”, “Beyond Ratings®” and all other trademarks and service marks used herein (whether registered or unregistered) are trademarks and/or service marks owned or licensed by the applicable member of the LSE Group or their respective licensors and are owned, or used under licence, by FTSE, Russell, FTSE Canada, FTSE FI, FTSE FI Europe, YB or BR. FTSE International Limited is authorised and regulated by the Financial Conduct Authority as a benchmark administrator.

All information is provided for information purposes only. All information and data contained in this publication is obtained by the LSE Group, from sources believed by it to be accurate and reliable. Because of the possibility of human and mechanical error as well as other factors, however, such information and data is provided "as is" without warranty of any kind. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the accuracy, timeliness, completeness, merchantability of any information or of results to be obtained from the use of FTSE Russell products, including but not limited to indexes, data and analytics, or the fitness or suitability of the FTSE Russell products for any particular purpose to which they might be put. Any representation of historical data accessible through FTSE Russell products is provided for information purposes only and is not a reliable indicator of future performance.

No responsibility or liability can be accepted by any member of the LSE Group nor their respective directors, officers, employees, partners or licensors for (a) any loss or damage in whole or in part caused by, resulting from, or relating to any error (negligent or otherwise) or other circumstance involved in procuring, collecting, compiling, interpreting, analysing, editing, transcribing, transmitting, communicating or delivering any such information or data or from use of this document or links to this document or (b) any direct, indirect, special, consequential or incidental damages whatsoever, even if any member of the LSE Group is advised in advance of the possibility of such damages, resulting from the use of, or inability to use, such information.

No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and nothing in this document should be taken as constituting financial or investment advice. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any representation regarding the advisability of investing in any asset or whether such investment creates any legal or compliance risks for the investor. A decision to invest in any such asset should not be made in reliance on any information herein. Indexes cannot be invested in directly. Inclusion of an asset in an index is not a recommendation to buy, sell or hold that asset nor confirmation that any particular investor may lawfully buy, sell or hold the asset or an index containing the asset. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

Past performance is no guarantee of future results. Charts and graphs are provided for illustrative purposes only. Index returns shown may not represent the results of the actual trading of investable assets. Certain returns shown may reflect back-tested performance. All performance presented prior to the index inception date is back-tested performance. Back-tested performance is not actual performance, but is hypothetical. The back-test calculations are based on the same methodology that was in effect when the index was officially launched. However, back-tested data may reflect the application of the index methodology with the benefit of hindsight, and the historic calculations of an index may change from month to month based on revisions to the underlying economic data used in the calculation of the index.

This document may contain forward-looking assessments. These are based upon a number of assumptions concerning future conditions that ultimately may prove to be inaccurate. Such forward-looking assessments are subject to risks and uncertainties and may be affected by various factors that may cause actual results to differ materially. No member of the LSE Group nor their licensors assume any duty to and do not undertake to update forward-looking assessments.

No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the applicable member of the LSE Group. Use and distribution of the LSE Group data requires a licence from FTSE, Russell, FTSE Canada, FTSE FI, FTSE FI Europe, YB, BR and/or their respective licensors.