The launch of the S&P 500 ESG Index in April 2019 signaled an evolution in sustainable investing. The S&P 500 ESG Index was built to underlie strategic, long-term mainstream investment products. Intentionally broad, the index seeks to maintain similar overall industry group weights as the benchmark, while providing an improved sustainability profile.
This paper outlines the following index characteristics:
• The easy-to-understand methodology behind the index
• How “financial materiality” drives index construction
• The historically similar risk-adjusted performance profile to the S&P 500
• The improved ESG characteristics of the S&P 500 ESG Index over the S&P 500
