Willis Towers Watson and Qontigo launch pioneering STOXX global index series that quantifies the climate transition risk of companies

12 October 2021

Enables investors to address the financial risk to company share prices caused by a climate transition by building balanced, mainstream, Paris-aligned portfolios.
Innovative, proprietary approach looks beyond simple strategies such as carbon exposure

Tax-efficient UCITS global equity fund launching to track STOXX Willis Towers Watson World Climate Transition Index with anticipated $1bn from Defined Benefit (DB) and Defined Contribution (DC) pension plan investors

Major Market Innovation for CoP26 Private Finance Agenda

Qontigo and Willis Towers Watson have launched an innovative family of climate transition indices driven by a next generation methodology that directly quantifies the impact of a Paris-aligned climate transition on equity valuations. The STOXX Willis Towers Watson Climate Transition Indices (CTI) help investors, governments and companies to manage risk, capture opportunities in their portfolios, align with the goals of the Paris agreement and work towards Net Zero targets.

The CTI enables a more sophisticated way of managing climate risk, that looks beyond carbon emissions, by making a forward-looking, bottom-up evaluation of transition risk and opportunity for each company. A proprietary Climate Transition Value at Risk (CTVaR) measure analyses the impact on projected company cashflows of moving from a ‘business as usual’ scenario – reflecting current policies – to a world where emissions pathways are fully aligned to the goals of the Paris agreement.

By incorporating climate risk explicitly, this innovative approach allows investors to allocate in a robust, transparent, and low-cost manner towards firms that will build – and benefit from – a future global economy that values and manages climate risks.

In addition to the launch of the index, AMX (the “Asset Management Exchange”) an affiliate of Willis Towers Watson is launching a UCITS fund, which will track the STOXX Willis Towers Watson World Climate Transition Index. Willis Towers Watson has partnered with EOS at Federated Hermes, a market leading stewardship provider, to deliver voting and engagement services for the fund. Climate change is a key focus area for EOS’ engagement.

The fund, which will be available to DB and DC pension plans in multiple countries, is anticipated to receive in the region of $1bn by the end of 2021.

Source: Willis Towers Watson