Christine Heyde, Equity & Index Product Design, Eurex and Guido Giese, Executive Director, Core Equity Research, MSCI
Eurex only began offering market participants the ability to hedge and trade derivatives on five MSCI ESG Screened futures indexes (World, EM, US, EAFE and Japan) that exclude corporates not in compliance with the United Nations Global Compact principles or predefined ESG screening criteria in March. But they have quickly become a sought-after derivative product at the Frankfurt-based derivatives exchange as the number of investors seeking to integrate ESG to mitigate today’s most challenging risks jumps.
“Our overall Eurex ESG Screened index futures offering is approaching one million contracts traded this year amounting to €12bn of traded volume,” says Christine Heyde, Equity and Index Product Design at Eurex speaking during a recent webinar hosted by Responsible Investor. Eurex was the first to launch ESG derivatives on key benchmarks in Feb 2019.
Appetite for ESG listed derivative products is growing in tandem with wider investor demand to integrate ESG, most visible in the underlying spike in appetite for ESG ETFs, the best proxy for broad ESG investment, she says. “ESG ETFs reached a new milestone in July when AUM went beyond $100bn, over 50% of which is still domiciled in Europe,” she says, attributing growth to investor awareness of ESG and ensuing client demand, heightened by the pandemic, and regulatory pressure.
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