Scientific Beta has launched a unique series of Climate Impact Consistent Indices (CICI) that make investment decisions and engagement practices consistent in order to maximise their impact.
The CICI offering is the only pure climate index offering on the market. Unlike traditional climate indices and benchmarks, which combine financial and climate criteria, either in the form of tilts applied to reference cap weights, or of carbon intensity score optimisation under tracking error constraints, the CIC indices make the weights of stocks depend solely on their climate performance. This strong methodological choice provides the CIC index with all of its consistency by avoiding financial considerations contradicting climate considerations.
CICI is positioned for implementing the recommendations of the Net-Zero investment coalitions at the portfolio-construction level. In particular, the Paris Aligned Investment Initiative (PAII) Framework states that one of the key elements of a “Paris aligned stewardship approach” is to develop an engagement strategy with a feedback loop to portfolio construction. CICI allows for the practical implementation of this approach where engagement and portfolio construction are neither mutually exclusive nor independent and instead can and should be mutually reinforcing. The CICI portfolio construction methodology thus greatly bolsters the power of an investor’s engagement strategy by establishing its credibility thanks to the consistency between the actions that it undertakes to engage companies on better climate alignment, and the investment decisions with respect to the same companies.
Commenting on the launch of the CICI offering, Dr Noël Amenc, CEO of Scientific Beta, says: “The weighting approach at the heart of CICI maximises the possible synergies between portfolio construction and engagement. By putting their money where their mouths are, investors bolster the potential for successful engagement. In this respect, Scientific Beta’s Climate Impact Consistent Indices not only align with ESG impact considerations but also promote real-world impact through a unique approach to portfolio construction.”
