FTSE Russell has announced the launch of two new fixed income indices, the FTSE Fixed Income TPI Climate Transition Index and the FTSE Fixed Income TPI Focused Glidepath Index. These new indicators are designed to support investors in addressing climate change and achieving their sustainability goals. The launch responds to the growing demand from business owners for investment strategies that take climate considerations into account and go beyond just focusing on carbon emissions. Both benchmarks use the Transition Pathway Initiative (TPI) data set to assess companies’ readiness to transition to a low carbon economy. TPI, a global initiative launched in 2017, is led by asset owners and supported by asset managers, and helps assess companies’ readiness to adapt to changes in the sky FTSE Russell first introduced its TPI Climate Transition Index in 2020 and the new offering builds on this foundation. The FTSE TPI Climate Transition Index is designed to represent global and local fixed income markets and sectors that are exposed to the risks and opportunities of climate change.
These indicators take into account a variety of climate-related factors, including carbon emissions, green income, green bonds and TPI data. It includes a forward-looking view of the company’s investment in the goals of the Paris Agreement through metrics such as operational quality and carbon performance. On the other hand, the FTSE Fixed Income TPI Concentrated Sliding Path Index Series follows a long-term investment strategy and aims to minimize tracking error. This index series directs proceeds from matured bonds into corporates with high carbon intensity, provided they are deemed aligned with the Paris climate goals for 2050, using TPI’s Carbon Performance data. Scott Harman, Head of Fixed Income, Currencies, and Commodities at FTSE Russell, highlighted the evolution of FTSE Russell’s climate indices to meet investor needs. He emphasized that investors are increasingly seeking indices that consider broader climate factors and green economy activities, while also incorporating forward-looking data. According to Harman, the new indices are designed to minimize tracking error from base indices while helping investors manage carbon risks, capture green revenues, and integrate forward-looking metrics. By merging the expertise of FTSE Russell and TPI, these new indices aim to provide comprehensive solutions for sustainable investing.