Bloomberg last week announced the launch of the Bloomberg Government Climate Tilted Bond Indices, a new benchmark family for government bond investors seeking exposure to the transition to a low-carbon economy. The indices provide investors with exposure to Bloomberg’s flagship fixed income benchmarks with an enhanced focus on countries incorporating climate transition objectives, added Bloomberg.
The indices adjust country weights in Bloomberg Treasury and Sovereign indices based on Bloomberg Government Climate Scores (GOVS), which assess a government’s relative preparedness in the transition to a low-carbon world using transparent, data-driven indicators, continued Bloomberg. The GOVS scores, provided by Bloomberg Sustainable Finance Solutions and informed by Bloomberg’s BloombergNEF (BNEF) data, comprise three equally weighted pillars: Carbon Transition, Power Sector Transition and Climate Policy.
“The newly launched Bloomberg Government Climate Tilted Bond Indices are designed to consider not only a country’s progress against its climate ambitions, but also forward-looking measures of outlook, including investment in renewable energy capacity,” said Chris Hackel, head of sustainable indices, Bloomberg Index Services Limited. “We’re excited to continue our collaboration with Bloomberg Sustainable Finance Solutions and BNEF to bring innovative solutions to the market that meet investors’ climate objectives across sectors and asset classes.”
Bloomberg says its Bloomberg Government Climate Tilted Bond Indices seek to balance considerations around climate-change related risks and opportunities with the need to maintain benchmarks that accurately reflect market liquidity and concentration risks. The Bloomberg Government Climate Scores, including the underlying pillars and factor data, can be used to create custom indices that meet investor-specific portfolio objectives. For example, country emissions fields can be used to create an index that achieves minimum CO2 emissions reduction along a fixed year-over-year decarbonization trajectory. Further, the scores and data can be used by investors seeking climate solutions within broader aggregate style fixed income indices.
The Bloomberg Government Climate Tilted Bond Indices include the following 14 indices at launch:
- Global Treasury Climate Tilted Bond Index
- Pan-Euro Treasury Climate Tilted Bond Index
- Euro Treasury Climate Tilted Bond Index
- Emerging Markets Local Currency Government Climate Tilted Bond Index
- Emerging Markets Local Currency Government Climate Tilted 10% Country Capped Index
- Emerging Markets Local Currency Government Universal Climate Tilted Bond Index
- Global Inflation-Linked Climate Tilted Bond Index
- Pan Euro Inflation-Linked Climate Tilted Bond Index
- Eurozone-Euro CPI Inflation-Linked Climate Tilted Bond Index
- Eurozone-All CPI Inflation-Linked Climate Tilted Bond Index
- Emerging Markets Hard Currency Sovereign Climate Tilted Bond Index
- Emerging Markets USD Sovereign & Sovereign Owned Climate Tilted Bond Index
- Emerging Markets USD Sovereign Climate Tilted Bond Index
- Emerging Markets Pan-Euro Sovereign Climate Tilted Bond Index
The company says as with all Bloomberg Indices, the Government Climate Tilted Bond Indices are available for benchmarking, asset allocation and product creation purposes.
Bloomberg Terminal clients can access the indices at {IN <GO>} and relevant factsheets, methodologies and research for the new indices are available on the Bloomberg ESG & Climate Indices publications page. Bloomberg Government Climate Scores can be accessed by Bloomberg Terminal customers at {BI ESG GOVCLIMATE <GO>}.
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