CAC 40 ESG®: Leveraging the French SRI label

On 22 March of this year, Euronext launched the CAC 40 ESG® index, the first national ESG index derived from iconic CAC 40® index family.

This is a fundamental step to accelerate the transition to a sustainable economy as the index will facilitate the adoption of mainstream ESG investment approaches by institutional and private investors. The CAC 40 ESG index is designed to identify the 40 companies from the CAC Large 60 that demonstrate the best Environmental, Social and Governance (ESG) practices and will allow investors to finance high-impact projects and companies in line with the United Nation Global Compact Principles. The index will also leverage on the principles defined by the successful French SRI label, a tool that was created in 2016 by the French Ministry of Finance helping to identify sustainable and responsible investments.

Products seeking to obtain the SRI label must meet a rigorous and exacting standard to demonstrate that they are managed using robust methods, are firmly committed to transparency and provide high-quality information. As such, Euronext in collaboration with Vigeo Eiris (V.E), an affiliate of Moody’s, provides a detailed reporting of the Environmental, Social and Governance performance compared to its universe of selection. These include the weighted average carbon intensity, the green to brown ratio, percentage of women on board, and percentage of independent board members.

To qualify, the SRI label has laid out a set of indictors that SRI funds must beat to receive certification, an important one being the Green to Brown ratio (GtoB). The Green to Brown ratio has a common objective with the taxonomy, to highlight companies that are transitioning their business model toward a sustainable economy by investing in products and services that have a positive impact on the environment.

This commitment reflects Euronext’s determination to be transparent with respect to the integration of ESG criteria as we are confident that understanding material ESG risks and early identification of long-term investment opportunities can lead to lower risk profiles.

For more information please click here.