ESG & Sustainability — June 24, 2021

Three Different Flavors of Sustainable Investing in the US

The STOXX® USA 500 ESG Broad Market, ESG Target, and ESG Target TE indices

These indices aim to provide alternatives for index investors and product issuers who are looking to switch to more sustainable versions of traditional benchmarks.

While each of the three ESG indices provides better ESG performance (i.e., higher ESG scores) than the parent benchmark STOXX® USA 500 Index, their characteristics differ. This allows investors to choose the ESG index that best aligns with their investment objectives.

When comparing the three ESG variants, investors need to consider their desired trade-off between having a higher ESG score and the active risk versus the underlying benchmark.

Author

Diana R. Baechle, PhD

Director, Applied Research