Barclays and MSCI have launched a new green bond index family measuring the global market of fixed income securities issued to fund projects and initiatives with direct environmental benefits.
The Barclays MSCI Green Bond Index family complements the existing Barclays MSCI ESG (Environmental, Social, and Governance) Fixed Income Index family, and is now available to institutional clients to license for their index-linked investment products, such as Exchange Traded Funds (ETFs), separately managed accounts, and structured products.
Eligibility for the Barclays MSCI Green Bond Index family is based on an independent and objective assessment of securities by MSCI ESG Research along four dimensions closely tracked by green bond investors: use of proceeds, project evaluation, management of proceeds, and reporting. Additional fixed income index criteria are then applied to this screened universe to identify index membership on a monthly basis. These assessment criteria and thresholds for eligibility were finalised following a market consultation.
Sean Kidney, CEO of the Climate Bonds Initiative, says: “The green bond market has grown enormously in recent years. The availability of market standard indices is important in establishing clear, broadly accepted guidelines for the new issuers rapidly entering the market. The stature of Barclays and MSCI will help to bring attention to green bonds.”
The indices will be useful benchmarks for both dedicated green investors as well as traditional fixed income investors seeking informational measures of green bond risks and return as part of their broader portfolio allocations. In addition to the flagship multi-currency Barclays MSCI Green Bond Index, sub-indices by currency, maturity, sector, and use of proceeds are available as part of the family.
“According to the Climate Bond Initiative, around USD30-40bn of green bonds will be issued this year, increasing to around US$100bn next year,” says Brian Upbin, Head of Benchmark Index Research at Barclays. “The Barclays MSCI Green Bond Index family should prove to be an extremely useful tool for issuers and institutional investors, and its introduction marks an important step in the evolution, transparency, and standardization of the green bond market.”
Remy Briand, Managing Director and Global Head of Equity Research at MSCI, says: “We are pleased to work with Barclays to expand the range of ESG benchmarks for the fixed income market. The Barclays MSCI Green Bond Index family demonstrates how this collaboration can support the development of this important new market and provide investors with benchmarks for performance measurement and investment products.”
