Eurex boosts ESG segment with derivatives launch

On the 10/09/20 at 7:44AM


Tuba Raqshan

New ESG futures and options on DAX 50 ESG and Euro Stoxx 50 ESG Indexes will be a step forward from merely screening to a true integration.

In addition to the futures and options on the Euro Stoxx 50 ESG Index, international derivatives exchange Eurex has stated that derivatives on the DAX 50 ESG Index will cover the German market for the first time. Companies that don’t comply with Global Standards Screening according to Sustainalytics will be excluded from the ESG version of the Euro Stoxx 50 Index. In addition to the exclusion screening, 10% of companies with lowest ESG scores are excluded and replaced by those with a higher score from the same Industry Classification Benchmark (ICB) Supersector.

Recognising the important roles played by ESG derivatives in transition to a sustainable economy, these derivatives would be based on indexes incorporating ESG scores. Therefore, in combination with screening out undesirable securities, ESG rankings will also play a role in the selection process.

Companies in the DAX 50 ESG Index must pass standardised ESG screens related to Sustanalytics’ Global Standards Screening (GSS), while affirming that they are not involved in controversial weapons, tobacco production, thermal coal, nuclear power or military contracting. The base universe of the DAX 50 ESG Index is the HDAX universe, comprising joint set of companies included in the DAX, MDAX and TecDAX Indexes.