Hang Seng Indexes, the company that manages and compiles major stock indexes covering Hong Kong and Chinese mainland stocks, has launched two new ESG-focussed indexes.
The HSI ESG Screened Index and HSI Low Carbon Index Indexes will provide new benchmarks for investors interested in sustainable investments.
The HSI ESG Screened Index
The HSI ESG Screened Index applies key ESG principles to Hong Kong’s bellweather Hang Seng Index.
Hang Seng constituents will be screened for their compliance with the United Nations Global Compact (‘UNGC’) Principles and for involvement in controversial product. After these two screenings, the remaining constituents will be re-weighed based on their ESG Risk Ratings.
From 7 December 2018, i.e. the base date of the index, to 29 October 2021, the annualized return of HSI ESG Screened Index outperformed the HSI by 2.1 percentage points.
The HSI Low Carbon Index
The HSI Low Carbon Index is also based on the Hang Seng Index, with constituent weightings adjusted according to constituents’ carbon emissions intensity.
Constituents with lower carbon emissions intensities will enjoy an increased weighting in the Index, and vice versa.
As of September 2021, the weighted average carbon intensity of the HSI Low Carbon Index was 66.7% lower compared with the main Hang Seng Index.
In addition, Hang Seng Indexes says it has formulated the HSI Sustainable Index which is a customized ESG related index to support our client’s product development.
Sustainable finance becoming “increasingly sophisticated”
Anita Mo, Chief Executive Officer at Hang Seng Indexes Company, said the index provider is respoding to greater mainstream focus on environmental, social and governance issues.
“As sustainable investing strategies continue to gain traction, more investors are incorporating sustainability factors into their investment processes and decisions,” she said.
“The launch of the HSI ESG Screened Index and HSI Low Carbon Index signifies our commitment to formulating various index products that meet the increasingly sophisticated sustainable finance interests and needs of investors.
“The new indexes will serve as investable benchmarks for onshore and offshore investors who are seeking to capture investment opportunities arising from the transition to a lower-carbon and greener economy.”