JP Morgan has teamed with asset management giant Blackrock to create a new suite of indices based on environmental, social and governance (ESG) factors.
The JP Morgan ESG (JESG) index will integrate these concerns into a benchmark, and will help bond investors find issuers with strong ESG practices.
It will initially be available for three of JP Morgan's flagship emerging markets bonds indices, and issuers with better ESG scores will have their weights increased relative to their baseline index weights.
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"Responsible investing is becoming the cornerstone of many of our clients strategies and having access to a proper global fixed income benchmark that integrates ESG is essential," said JP Morgan's Gloria Kim.
The JESG index will overweight "green bond" issuances, and screen out "controversial" sectors such as thermal coal, tobacco, weapons and any violator of the United Nations Global Compact principles.
It will score more than 650 issuers in 170-plus countries, using data from research providers Sustainalytics, RepRisk, and Climate Bonds Initiative as inputs.
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