Euronext has indicated that it wants to extend its ESG (environment, social, and governance) indices to all its markets, including the Brussels Stock Exchange. Six to seven Bel 20 stocks could be included in the Bel ESG index.
Stock market indices are increasingly adopting a green tint. This year, Euronext, the group that brings together the Paris, Amsterdam, Brussels, Oslo, Lisbon, and Dublin stock exchanges, launched a CAC ESG index and a MIB ESG index, to enable the launch of ETFs (exchange-traded funds that track an index) on the theme. “ETFs linked to ESG indices are doing very well,” noted Stéphane Boujnah, CEO of Euronext. Since 2018, the group has listed 460 ESG-linked ETFs, with €146 million under management. “Investors are asking for value, liquidity, yield and a contribution from the companies they invest in to the decarbonization of the economy and a contribution to the society in which they operate, as well as a governance effort, more transparency. This is a very profound reality,” he noted. “Investors are asking us for ESG indices, which is why we launched the ESG CAC and MIB indices. We are going to deploy these same indices in the Euronext countries,” he added.
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Within the index, six members are subject to the Science Based Target Initiative
Stéphane Boujnah said that for smaller Euronext-listed indexes like the Bel 20, the group will consider. “We will see. We will ask the question on smaller indices,” he said. “In the Belgian ecosystem, there are many companies active in the renewable sector and many companies in the energy sector that are making considerable efforts. We need to look at that perspective,” he added.
“WDP frequently finds itself in ESG funds because the company is eligible for this category. Specializing in warehouses, the company is experiencing an explosion of business with the e-commerce boom, but it is increasingly banking on sustainable warehouses,” said Michel Ernst, senior analyst at CBC.
Bel 20 companies are already being considered for the Bel ESG Index. Solvay, Umicore, Cofinimmo, and WDP are among those mentioned. “Umicore is very well known for recycling non-ferrous metals,” noted Michel Ernst, senior analyst at CBC. “WDP is frequently found in ESG funds because the company is eligible for this category. Specializing in warehouses, the company is experiencing a boom in business with the e-commerce boom, but is increasingly focusing on sustainable warehouses,” he added.
“The Sciences Based Target Initiative criteria ensure the goal of maximum temperature increase below 2 degrees. AB InBev and Cofinimmo have aligned themselves for a target under 1.5 degrees,” said Laura Roba, an analyst at Degroof Petercam
At Degroof Petercam, analyst Laura Roba pointed out that six Bel 20 stocks have submitted to the Science-Based Target Initiative, “which allows companies to align themselves with the targets set by the Paris agreements and gain credibility.” These companies include AB Inbev, Cofinimmo, UCB, Solvay, Umicore, and Proximus. “Proximus has gone even further by declaring that it wants to become carbon neutral by 2030,” she pointed out. “The Sciences Based Target Initiative criteria ensure the objective of a maximum temperature increase below 2 degrees. AB InBev and Cofinimmo have aligned themselves for a target under 1.5 degrees,” the analyst said. She added that Solvay and Umicore “have yet to submit their targets.”
Euronext said in a document it assigns an ESG score for each stock eligible for its ESG indices, based on 38 criteria, including respect for the environment, respect for human rights, respect for workers’ rights, contribution to the economic and social development of their community, business conduct and corporate governance. For the MIB ESG Index, for example, the group has selected 35 stocks out of a total universe of 60 companies, whereas the historical MIB has 40. As with its historical indices, the company will conduct an annual review. One could therefore imagine that the group will also look at companies in the broader Brussels market.
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First published in L’ECHO, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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