S&P launches long-term sustainability index
Monday, 25 January 2016 12:18pm

S&P Dow Jones Indices has launched the S&P Long-Term Value Creation (LTVC) Global Index, aimed at tracking companies with the potential to create "long-term value".

Developed jointly with the Canada Pension Plan Investment Board, the LTVC index measures sustainability criteria and projected investment outcomes over a long-term horizon. S&P's statement said these companies "have demonstrated the ability to manage both current and future economic and governance opportunities ... [and] must also have a sustained history of financial quality."

"Over the past few years, there has been an intensifying investor demand for a benchmark that captures companies that take a long-term approach in making business decisions," said S&P Dow Jones Indices chief executive Alex Matturri.

"The launch of the S&P LTVC Global Index is a manifestation of the long-termism concept with an independent and transparent approach. We are proud to leverage our deep indexing knowledge to facilitate awareness and education for market participants."

Unsurprisingly (given the objective of the index), there has been particular interest from large long-term institutional investors and sovereign wealth funds. New Zealand Superannuation Fund chief executive Adrian Orr commented on the launch, saying that "Traditional market practices and products have not always been conducive to such investing.

"We are pleased to see ideas raised through FCLT take practical form in this important new index for global markets. The Index is smart and innovative and we will be looking hard at how we might add it to our toolkit for long term investing."

This index follows on from the Dow Jones Sustainability Indices, offered jointly by RobecoSAM and S&P Dow Jones Indices, which are limited to companies that pass RobecoSAM's environmental, social and governance (ESG) evaluations, collectively called the Corporate Sustainability Assessment (CSA). Morningstar has also introduced ESG ratings, based on scores provided by ESG researcher Sustainalytics, for managed and exchange-traded funds.

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