Singapore Exchange (SGX) plans to develop climate-related products, including futures contracts, benchmarked against index provider MSCI Inc’s new climate indexes.
The MSCI Climate Action Indexes launched last week include companies that are taking concrete steps to reduce their carbon emissions.
SGX has signed an agreement with MSCI to licence the benchmarks.
“To enhance its current suite of climate products, SGX will be working with market participants to develop a range of climate-related products including futures contracts to help investors reduce their portfolio carbon footprint,” the bourse says in a statement on October 28.
According to Chief Executive Officer Loh Boon Chye, SGX, as a leading exchange in Asia, has a “unique responsibility to lead the market in managing climate risk”.
Launched on October 24, the new suite of indexes comprises world, all country world, emerging markets, US, and Europe climate action benchmarks.
They are aimed at investors who want exposure to all economic sectors and favour a bottom-up index selection approach based on current and forward-looking climate indicators, as well as those looking to follow the Glasgow Financial Alliance for Net Zero’s recommendations to reduce carbon emissions.
According to MSCI Chairman and CEO Henry Fernandez, the deal with SGX will allow them to help accelerate the finance and investment industry’s progress towards net zero and a more sustainable future.
“This industry has a key role to play in reaching net zero, and MSCI is proud to do our part in making innovative climate tools more widely available,” he says.