CME Group has launched E-mini S&P Europe 350 ESG Index futures, a targeted risk management tool to align with environmental, social and governance (ESG) values.
The S&P Europe 350 ESG Index is a broad-based, market-cap weighted index that is designed to measure the performance of securities meeting sustainability criteria, while maintaining similar overall industry group weights as the S&P Europe 350. This index incorporates S&P DJI ESG Scoring.
E-mini S&P Europe 350 ESG Index futures will be cash-settled in euro and will be subject to the rules and regulations of CME.
The new products build on the company’s E-mini S&P 500 ESG Index futures contract, which will be available for trading on 24 May, pending regulatory review.
Derivatives are increasingly becoming a critical tool for ESG market participants as demand for sustainable products continues to rapidly evolve. According to Bloomberg Intelligence Global, ESG 2021 Outlook, ESG assets may top $53 trillion by 2025.
“Interest in ESG strategies continues to increase as financial institutions incorporate sustainable investing objectives into their trading strategies,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products.
He added, “Futures products can be an important part of the solution. This latest addition to our ESG offerings will allow market participants in this region to gain exposure to a European index based on a robust ESG methodology – all to meet their risk management needs.”
Reid Steadman, Global Head of ESG at S&P Dow Jones Indices commented, “We are excited that the ecosystem of financial products linked to our ESG indices is growing and diversifying as more investors incorporate sustainability targets in their strategies,”.
He noted, “CME Group’s E-mini S&P Europe 350 ESG Index Futures complements the successful launch in the US in 2019 of E-Mini futures tied to our S&P 500 ESG Index, enabling us to bring ESG principles to a broader group of global market participants.”