FTSE Russell has announced the launch of the Russell US ESG Indexes, designed to integrate ESG into institutional-grade US equity indexes.
Based on FTSE Russell’s widely used US equity benchmarks – the Russell 1000, Russell 2000 and Russell 3000 indexes – the new index series contains two sub-groups: the Russell ESG Screened Target Exposure Indexes and the Russell ESG Enhanced Target Exposure Indexes.
Currently, the Russell US indexes capture 98 per cent of the US investable market capitalisation and are tracked by US$10.6 trillion in passive and active funds.
“The Russell US ESG Indexes was developed for investors looking to incorporate sustainability considerations within a broad market portfolio without impacting the risk and return characteristics of the headline benchmark,” said Tony Campos, head of Sustainable Investment, Americas, FTSE Russell.
“Moreover, the two sub-groups were constructed with different client use cases in mind, giving investors options based on their preferences for ESG,” Mr Campos said.
He explained that the ESG Screened versions are for investors who want to remove harmful products or controversial activities and still maintain broad US market exposure, while the ESG Enhanced versions are designed for investors seeking ESG score enhancement alongside the risk and return characteristics of the underlying benchmark.
Soaring investor interest in ESG has translated to a growth in assets in the US, with up to US$550 billion AUM now in ESG/SRI funds, an 88 per cent increase since 2018, leading to new index developments, sustained inflows into passive ESG funds, and the mainstreaming of ESG into passive investing.
The Russell US ESG indexes include:
• Russell 1000 ESG Enhanced Target Exposure Index
• Russell 2000 ESG Enhanced Target Exposure Index
• Russell 3000 ESG Enhanced Target Exposure Index
• Russell 1000 ESG Screened Target Exposure Index
• Russell 2000 ESG Screened Target Exposure Index
• Russell 3000 ESG Screened Target Exposure Index
