CDP data at heart of new Euronext green index underpinning Goldman Sachs structured products

Goldman licenses new Euronext CDP Environment France index

Environmental data non-profit CDP has today announced the launch of a new environmental index with US giant Goldman Sachs and European stock exchange Euronext, targeting the French market.

The Euronext CDP Environment France index, which is exclusively licensed to Goldman Sachs, uses CDP’s data to select the 40 best environmentally performing companies from the 100 largest by capitalisation in France’s SBF 120 index.

Laurent Babikian, Director of Investor Engagement, Europe, at CDP, told RI that CDP advised Euronext on methodology after the index provider was approached by Goldman Sachs to create the new environmental index.

Babikian said that the “beauty” of the new index is that it is the first to select companies based on their performance in relation to three key environmental areas: climate change, water security, and deforestation.

Goldman Sachs will use the new index to underpin a “family of structured products” to be offered to France’s interbank market, according to Babikian.

The returns on the Goldman notes will be linked to the new index’s yearly quote price
– with investors guaranteed to get back what they put in, regardless.

Babikian said: “It is very interesting for investors who want to take advantage of environmental aspects but with capital guaranteed.”CDP said in a statement that the launch of the new index is supported by a “favourable” political context for green finance in France. The country’s Financial Markets Authority recently validated a guide introducing a special status for ESG filters, which “exempts them from counting as an additional mechanism for public offers in France”.

RI recently covered the latest ESG developments in France in a country snapshot.

“The Paris Agreement and the Sustainable Development Goals demand that significant capital is allocated to low carbon, water-secure and deforestation-free businesses,” Babikian said. “This index – a global first in its environmental scope – marks a major milestone in delivering a selection of France’s biggest corporates who outperform the market across three critical themes of climate change, water, and forests.”

This is not the first time the CDP, which gathers corporate climate data on the behalf of institutional investors representing assets of $87trn, has been involved in the creation of indexes.

It has previously worked with Euronext on its low carbon index, Euronext Low Carbon 100 and with index provider FTSE on its FTSE CDP Carbon Action series.

In 2009, financial data firm Markit launched a series of indices based on the CDP’s Carbon Disclosure Leadership Index (CDLI), which are no longer available.