Index provider FTSE Russell announced today the launch of two new fixed income indices, including the FTSE Fixed Income TPI Climate Transition Index Series and the FTSE Fixed Income TPI Focused Glidepath Index Series, aimed at supporting investors in meeting their climate commitments.

According to FTSE Russell, the launch of the new indices comes amid growing demand from investors growing demand from investors to integrate climate considerations into their investment strategies, and as their implementation decisions increase in sophistication, requiring investment solutions that go beyond a narrow focus on carbon emissions and that can meet sustainability requirements with different investment purposes.

The new indices each provide expertise via the Transition Pathway Initiative’s (TPI) dataset to assess companies’ readiness for the climate transition. Founded in 2017, the Transition Pathway Initiative is a global initiative led by asset owners and supported by asset managers that assesses companies’ preparedness for the transition to a low-carbon economy and supports efforts to address climate change. FTSE Russell launched its initial TPI Climate Transition Index in 2020.

The FTSE Fixed Income TPI Climate Transition Index Series aims to reflect the performance of global and regional fixed income markets, with index constituent weighted to account for risks and opportunities associated with the transition to a low-carbon economy. Climate factors considered include carbon emissions, green revenues, green bonds, and TPI inputs enabling a forward-looking view on company alignment with the goals of the Paris agreement, encompassing a management quality score and a carbon performance score.

The FTSE Fixed Income TPI Focused Glidepath Index Series is a long-only investment selection index targeting low tracking error through a re-financing approach, utilizing a buy and hold strategy for corporate bonds, with the use of proceeds from matured bonds directed into high carbon intensive corporates that are assessed to be Paris aligned by 2050 using the TPI Carbon Performance data.

Scott Harman, Head of Fixed Income, Currencies and Commodities at FTSE Russell, said:

“FTSE Russell climate indices have evolved to meet the increasing sophistication of sustainable investors. We have seen growing demand from investors for indices that go beyond a narrow focus on carbon emissions and allow investors to integrate company activity within the green economy and leverage forward looking metrics, whilst minimising tracking error from the base index. By bringing together data and analysis from both FTSE Russell and TPI, these new index series’ will offer investors solutions to support their climate commitments by mitigating carbon risk, capturing green revenues and incorporating forward-looking metrics.”