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- Today’s launch focuses on the rising trend of incorporating sustainable investment themes into the Canadian fixed income index construction
- New index series consists of the first-of-its-kind, FTSE Canada Universe Ex-Fossil Fuels Bond Index Series and FTSE Canada Green Impact Bond Index Series
FTSE Russell, a leading global index, data, and analytics provider announced the introduction of a new series of sustainable fixed income indexes. These are designed to enable greater choice for Canadian investors seeking to calibrate their exposure to fossil fuels as the low carbon transition accelerates and invest in areas related to green and broader sustainability topics that are underserved by current indexes within the Canadian fixed income market.
The newly launched FTSE Canada Green Impact Bond Index Series and FTSE Canada Universe Ex-Fossil Fuels Bond Index Series use a transparent, rules-based approach to identify and screen issuers, bringing greater consistency across fixed income and providing investors with a choice of tools to calibrate exposure in their portfolios. The indices also take a robust, distinctive approach to identify issuer’s business sustainability efforts and exposure to fossil fuels. One of the datasets used is the Refinitiv Business Classification (TRBC), a flagship sector classification that covers more than 250,000 securities and is the most detailed and comprehensive data classification currently available.
The FTSE Canada Green Impact Bond Index Series has been designed to represent the performance of investment-grade, high-yield and Maple (CAD-denominated) green debt issued by Canadian governments, government agencies, and corporations. The Index Series helps investors align their portfolios towards improved environmental outcomes.
The FTSE Canada Universe Ex-Fossil Fuels Bond Index Series is the first-of-its-kind in the Canadian fixed income market and is designed to track the performance of constituents of the FTSE Canada Universe Bond Index after the exclusion of companies whose revenue and/or reserve exposure to fossil fuels exceeds a set threshold, as investors increasingly look to calibrate their exposure to fossil fuels in their portfolios.
Marina Mets, Head of Americas, Fixed Income and Multi-Asset Index Product Management at FTSE Russell comments:
“Our new FTSE Canada SIFI indexes address growing client demand for sustainability-focused solutions in the Canadian fixed income market. With rising investor needs for greater choice when it comes to managing fossil fuel exposure in portfolio, we have developed a thorough and rigorous methodology to enable climate-conscious investors to align their investment strategy, financial interests, and values. We believe green and sustainable investing in the Canadian fixed income market will grow in the coming years as investors look for opportunities in Canada’s transition to a low carbon economy.”
The University of Toronto’s endowment fund, managed by its affiliate, University of Toronto Asset Management Corporation, has recently seeded a new fixed income strategy, offered by a third-party asset management firm. The strategy is benchmarked against the FTSE Canada All Corporate Ex Fossil Fuels Enhanced Bond Index, and which accordingly excludes fossil fuel issuers from its investment universe.
Chuck O’Reilly, President and Chief Investment Officer at University of Toronto Asset Management Corporation comments:
“The FTSE Canada All Corporate Ex Fossil Fuels Enhanced Bond Index enables us to further implement our responsible investment strategy for the University of Toronto’s endowment fund. Through its transparent, rules-based approach to screening fossil fuel and carbon exposure out of investor portfolios, it provides a positive solution for us to be able to activate our long-term responsible investment objectives in the Canadian fixed income market.”
FTSE Russell is committed to developing a comprehensive range of green, social, and sustainability impact bond indices by combining FTSE Russell’s index construction expertise with data expertise from across the broader LSEG Group to meet the needs of our clients.
