The £9 billion Merseyside Pension Fund has decided to use a new “smart sustainability”, multi-factor climate index from FTSE Russell within its listed equity portfolio.
Merseyside said it chose the index as it would help with the implementation of its climate risk strategy within its listed equity portfolio. Merseyside Pension Fund investment manager, Owen Thorne, commented: “We are pleased to have worked with FTSE Russell to produce a low carbon index solution that provides use with an investable, risk-efficient means of achieving our decarbonisation goals.” The aim of Merseyside’s climate strategy is to align its responsible investment policy and activities with the goals of the 2015 Paris Agreement.
The new index is part of FTSE Russell’s smart sustainability index series, which aim to help investors integrate climate risks and opportunities alongside multi-factor or smart beta exposure. The index is based on the FTSE All World index and aims to give broad exposure to it, along with balanced exposures to low volatility, momentum, quality, size and value factors. It also looks at three parameters for climate change considerations: carbon efficiency, fossil fuel reserves and green revenues of constituent companies.
FTSE Russell head of sustainable investing, Aled Jones, said: “We are delighted to be working with Merseyside Pension Fund to support its ambitious climate risk strategy. Combining a multi-factor approach with a focused set of sustainability parameters is a new and exciting approach for the integration of sustainability and ESG considerations into passive investment strategies.”