Case Studies

Derivatives on ESG Benchmarks

Trading Desks

Fund Managers

Portfolio Managers

Risk Managers


The Need

As ESG becomes the backbone of more investment decisions, portfolios are changing. Investors need new indices that can accurately reflect sustainable mandates and underly appropriate investment instruments such as derivatives to better manage and hedge portfolios.

The Challenge

When one of Scandinavia’s largest asset managers extended its responsible-investing principles to all types of investment instruments, it left its trading arm with virtually no listed derivatives to manage flows and risk on many equity portfolios. Existing European equity derivatives had exposure to controversial activities banned by the firm’s responsible policies.

The Solution

Working in conjunction with the client, we devised versions of flagship and well-established STOXX benchmarks that would observe responsible policies without incurring in significant tracking error. Through a market consultation we identified the standard policies of leading asset owners and incorporated them into the benchmark design. Thanks to our close collaboration with Eurex, we were able to launch in relatively short time the first ESG-screened derivatives on a European benchmark — the STOXX® Europe 600 ESG-X Index — and the first ones on a US benchmark with a screening for thermal-coal mining and coal-fired power plants — the STOXX® USA 500 ESG-X Index.

The Qontigo Advantage

Experience in designing liquid, rules-based indices that underly some of the world’s most-traded derivatives

‘Open architecture’ philosophy allows us to partner with the leading data providers, such as Sustainalytics, whose ESG screening methodology’s quality is recognized worldwide

Our indices respond to specific client needs, and we work together with stakeholders in every step of the process to design solutions that are viable and efficient from a trading perspective

STOXX Products