How can data insights and indices help?
The Bloomberg Sustainable Indices team continues to create new indices that target specific objectives. Earlier this year, we launched the Bloomberg Global Aggregate GSS (Green, Social, and Sustainability) Bond Index, which includes only bonds that have their proceeds designated for environmental or social objectives. Many investment managers have retained the Article 9 designation for their green bond funds. We are also developing indices with our rich set of EU taxonomy fields, including what percentage of a company’s revenues substantially contribute to aligned activities.
In the current environment, it’s crucial that we make available all of the sustainable or ESG fields, factors, and data that fund managers need for regulatory labelled funds and products, and for indices based on their own priorities. Bloomberg has developed multiple tools on the Terminal with transparent methodologies, which fund managers can use to develop analytics, including on coverage and portfolio exposure to mandatory fields in SFDR reports, sectorial and aggregated carbon emissions of portfolios, or benchmarking of ESG debt decomposition in fixed income.
How have Bloomberg Sustainable Indices evolved?
Sustainable and ESG investing approaches have changed at an incredible pace in recent years. Prior to that, sustainable investing was fairly straightforward, consisting primarily of values-based company exclusions or ESG score integration. Sustainable investing now also encompasses net-zero-aligned funds, impact investment, and themes from gender equality to clean energy.
As an index provider, we help fund managers advance sustainable investment through benchmarks that capture and represent performance and risk characteristics – alongside sustainable characteristics including ESG scores, principal adverse impacts, and emissions profiles. We aim to offer solutions for diverse approaches to sustainability, with a focus on transparency in our methodology and data.
How do fund managers use these insights to succeed?
There are billions of dollars invested in funds and products referencing Bloomberg ESG, climate, impact, and thematically sustainable indices. Fund managers work with us because of the insights we provide, and because of their confidence in the quality and transparency of our solutions. There is tremendous innovation happening in sustainable investment, and Bloomberg offers managers the capabilities and flexibility to benchmark and meet specific targets.
Our indices also add value to the market by measuring and representing the dynamics of specific segments being impacted, as the world transitions to low carbon. Here, we use data and expertise from teams trusted by the investment community such as Bloomberg Sustainable Finance Solutions, BloombergNEF and Bloomberg Intelligence to inform index construction. We have launched indices focused on clean energy, renewables, transition metals and more.
What excites you about the future?
Sustainable investing is still in its infancy. We’re invigorated by working on new themes such as nature and biodiversity and the expansion of sustainable investment into different asset classes. Recent initiatives include a ‘Carbon Tilted’ version of our BCOM commodity index, as well as indices benchmarking commodities essential for climate transition. Development is underway on a version of the Bloomberg US Municipal Bond Index that integrates ESG scores, complementing our Municipal Impact Index. We’re also researching climate and social themes in mortgage-backed securities.
We are incredibly excited about the potential impact of sustainable investment on societies, economies, and the planet.