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S&P DJI launches biodiversity-focused benchmarks
New indices offer insights for clients seeking to measure and analyze investments’ impact on the natural world
The Asset 28 Feb 2024

S&P Dow Jones Indices has rolled out S&P Biodiversity Indices, adding to the range of sustainability-oriented performance benchmarking tools it offers to asset managers and other financial institutions.

Two new indices, the S&P 500 Biodiversity Index and S&P Global LargeMidCap Biodiversity Index, measure the performance of a subset of equity securities from the S&P 500 and S&P Global LargeMidCap indices. To develop the biodiversity-focused versions of these underlying equity market benchmarks, S&P 500 and S&P Global LargeMidCap index constituents are selected and weighted to reflect their alignment with certain environmental and biodiversity objectives.

“S&P Dow Jones Indices’ approach to index design reflects a holistic view of the vast sustainability ecosystem and biodiversity is an important part of this equation,” says Jas Duhra, global head of sustainability indices at S&P DJI. “The S&P Biodiversity Indices are designed to help offer additional insights for our clients and market participants who are seeking to measure, analyze and better understand their investments’ impact on the natural world, and support their goals to create a more resilient and ecologically conscious investment landscape.”

As part of the process of screening and selecting the constituents of the two indices, S&P DJI used S&P Global Sustainable1’s nature and biodiversity risk dataset, which assesses nature-related impacts and dependencies across a company's direct operations and can be applied at the asset, company and portfolio level.

“S&P Global Sustainable1 research shows that 85% of the world’s largest companies have a significant dependency on nature and biodiversity,” says Steven Bullock, global head of research and methodology at S&P Global Sustainable1. “This makes access to nature- and biodiversity-focused data, insights, and analytics essential in the support of market participants understanding, managing, and mitigating exposure of nature-related risks and impacts.”

According to S&P DJI, the S&P Biodiversity Indices offer a unique performance benchmarking solution that integrates biodiversity, the United Nations’ Sustainable Development Goals (UN SDGs) and carbon datasets to align with the targets defined by the UN’s Biodiversity Conference (COP15). As such, index constituents are selected and weighted to reflect a collective reduction of the ecosystem impact intensity, limit the proportion of ecosystem impact to significant land, alignment with specific UN SDGs, and a reduction in the carbon footprint relative to the constituents in the underlying-parent indices.

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