- New index series consists of the FTSE JPX Net Zero Japan 500 Index and FTSE JPX Net Zero Japan 200 Index and will achieve alignment with net zero emissions pathways by 2050
- The indices incorporate multiple dimensions of climate exposure including carbon emissions, fossil fuel reserves, green revenues, climate governance, and carbon performance
- Launch underpins FTSE Russell and JPXI partnership to design financial market infrastructure initiatives to promote global sustainable investment
- The FTSE JPX Net Zero Japan Index Series adheres to the EU’s Climate Transition Benchmark (CTB) standards, enabling investors to reallocate capital based on the climate credentials and carbon performance of the constituent companies in the index
FTSE Russell, a leading global index, data and analytics provider, JPX Market Innovation & Research, Inc. (“JPXI”) a wholly owned subsidiary of Japan Exchange Group (JPX), and JPX today announced the launch of the FTSE JPX Net Zero Japan Index Series. The new index series consists of two indices, FTSE JPX Net Zero Japan 500 Index and FTSE JPX Net Zero Japan 200 Index. Both adhere to the EU’s Climate Transition Benchmark (CTB) standards, which enables investors to reallocate capital based on the climate credentials and carbon performance of the constituent companies in the index.
Japanese investors are increasingly seeking to mitigate climate risks, capture climate opportunities from the nascent green economy and ensure alignment with Net Zero emissions pathways by 2050 in their portfolios. FTSE Russell’s 2021 Sustainable Investment survey of global asset owners found that over two thirds (68%) of APAC asset owners are prioritising climate issues and over half are ‘very concerned’ about climate risk.
The FTSE JPX Net Zero Japan Index Series aligns to net zero by 2050 by applying average 7% annual reduction in carbon emissions and fossil fuel reserves. The indices are also designed to achieve a 30% relative reduction in those climate characteristics compared with its respective base index. In addition, the indices achieve a significant uplift in exposure to the green revenues of the companies to evaluate those that are benefitting from the transition to the green economy.
The indices integrate Transition Pathway Initiative (TPI) Management Quality scores and Carbon Performance scores. The TPI is backed by over 100 major asset owners with a combined $40 trillion in AUM and advice. The scores are used to increase exposure to companies that demonstrate a higher level of preparedness for a low-carbon transition. TPI Management Quality scores measure a company’s incorporation of climate change considerations into their business strategy. TPI Management Quality scores are based on the recommendations of the Taskforce for Climate-Related Financial Disclosures (‘TCFD’). TPI Carbon Performance scores measure how companies’ carbon performance might compare to the international targets and national pledges made as part of the Paris Agreement. The indices achieve improved average TPI MQ scores and use TPI CP scores to overweight/underweight companies.
The indices will be used as the basis of passive fund allocation, as a performance benchmark for actively managed funds, or to inform investment research.
Arne Staal, CEO, FTSE Russell, comments:
“We’re delighted to expand on our partnership with JPX to bring this new climate index series to the market. COP 26 in Glasgow highlighted the critical need for financial markets to be part of the solution to the climate emergency, and this partnership reinforces our commitment to enable this transition. Our collaboration with JPX provides investors with important new tools to enable capital reallocation in Japanese equity markets. The FTSE JPX Net Zero Japan 500 Index will give investors the ability to align their exposure with the 2015 Paris Agreement using the TOPIX 500 as a base universe.”
Koichiro Miyahara, President & CEO of JPX Market Innovation & Research comments:
“In July 2018, London Stock Exchange Group and JPX agreed to collaborate in the sustainable investment field and on product marketing around ESG-related products and services. Under that framework, we are delighted that FTSE Russell and JPXI jointly commence the calculation of the new environmental index series. As the leading index provider for Japanese equities, JPXI expects this initiative supports efforts towards carbon neutrality. It is also a great honour for JPXI which was established on 1 April 2022, to jointly provide the first new co-branded index with FTSE Russell.”
JPX and LSEG, as Partner Exchanges in the United Nations (UN) Sustainable Stock Exchanges (SSE) initiative, are both firmly and demonstrably committed to promoting sustainable investment. The newly launched indices are the latest collaboration between London Stock Exchange Group and JPX after their agreement to work together to design financial market infrastructure initiatives to promote global sustainable investment in July 2018.
For more information on the FTSE JPX Net Zero Japan Index Series, visit here.
Base index of FTSE JPX Net Zero Japan 500 Index is a reference index that contains TOPIX 500 constituents. Base index of FTSE JPX Net Zero Japan 200 Index is the largest 200 stocks in terms of market value in the reference index.
London Stock Exchange Group
Director, Communications, Asia Pacific
Mobile +65 9793 4140
About FTSE Russell:
FTSE Russell is a global index leader that provides innovative benchmarking, analytics and data solutions for investors worldwide. FTSE Russell calculates thousands of indexes that measure and benchmark markets and asset classes in more than 70 countries, covering 98% of the investable market globally.
FTSE Russell index expertise and products are used extensively by institutional and retail investors globally. Approximately $16 trillion is currently benchmarked to FTSE Russell indexes. For over 30 years, leading asset owners, asset managers, ETF providers and investment banks have chosen FTSE Russell indexes to benchmark their investment performance and create ETFs, structured products and index-based derivatives.
A core set of universal principles guides FTSE Russell index design and management: a transparent rules-based methodology is informed by independent committees of leading market participants. FTSE Russell is focused on applying the highest industry standards in index design and governance and embraces the IOSCO Principles. FTSE Russell is also focused on index innovation and customer partnerships as it seeks to enhance the breadth, depth and reach of its offering.
FTSE Russell is wholly owned by London Stock Exchange Group.
For more information, visit www.ftserussell.com.
© 2022 London Stock Exchange Group plc and its applicable group undertakings (the “LSE Group”). The LSE Group includes (1) FTSE International Limited (“FTSE”), (2) Frank Russell Company (“Russell”), (3) FTSE Global Debt Capital Markets Inc. and FTSE Global Debt Capital Markets Limited (together, “FTSE Canada”), (4) FTSE Fixed Income Europe Limited (“FTSE FI Europe”), (5) FTSE Fixed Income LLC (“FTSE FI”), (6) The Yield Book Inc (“YB”) and (7) Beyond Ratings S.A.S. (“BR”). All rights reserved.
FTSE Russell® is a trading name of FTSE, Russell, FTSE Canada, FTSE FI, FTSE FI Europe, YB and BR. “FTSE®”, “Russell®”, “FTSE Russell®”, “FTSE4Good®”, “ICB®”, “The Yield Book®”, “Beyond Ratings®” and all other trademarks and service marks used herein (whether registered or unregistered) are trademarks and/or service marks owned or licensed by the applicable member of the LSE Group or their respective licensors and are owned, or used under licence, by FTSE, Russell, FTSE Canada, FTSE FI, FTSE FI Europe, YB or BR. FTSE International Limited is authorised and regulated by the Financial Conduct Authority as a benchmark administrator.
All information is provided for information purposes only. All information and data contained in this publication is obtained by the LSE Group, from sources believed by it to be accurate and reliable. Because of the possibility of human and mechanical error as well as other factors, however, such information and data is provided "as is" without warranty of any kind. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the accuracy, timeliness, completeness, merchantability of any information or of results to be obtained from the use of FTSE Russell products, including but not limited to indexes, data and analytics, or the fitness or suitability of the FTSE Russell products for any particular purpose to which they might be put. Any representation of historical data accessible through FTSE Russell products is provided for information purposes only and is not a reliable indicator of future performance.
No responsibility or liability can be accepted by any member of the LSE Group nor their respective directors, officers, employees, partners or licensors for (a) any loss or damage in whole or in part caused by, resulting from, or relating to any error (negligent or otherwise) or other circumstance involved in procuring, collecting, compiling, interpreting, analysing, editing, transcribing, transmitting, communicating or delivering any such information or data or from use of this document or links to this document or (b) any direct, indirect, special, consequential or incidental damages whatsoever, even if any member of the LSE Group is advised in advance of the possibility of such damages, resulting from the use of, or inability to use, such information.
No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and nothing in this document should be taken as constituting financial or investment advice. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any representation regarding the advisability of investing in any asset or whether such investment creates any legal or compliance risks for the investor. A decision to invest in any such asset should not be made in reliance on any information herein. Indexes cannot be invested in directly. Inclusion of an asset in an index is not a recommendation to buy, sell or hold that asset nor confirmation that any particular investor may lawfully buy, sell or hold the asset or an index containing the asset. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
Past performance is no guarantee of future results. Charts and graphs are provided for illustrative purposes only. Index returns shown may not represent the results of the actual trading of investable assets. Certain returns shown may reflect back-tested performance. All performance presented prior to the index inception date is back-tested performance. Back-tested performance is not actual performance, but is hypothetical. The back-test calculations are based on the same methodology that was in effect when the index was officially launched. However, back-tested data may reflect the application of the index methodology with the benefit of hindsight, and the historic calculations of an index may change from month to month based on revisions to the underlying economic data used in the calculation of the index.
This document may contain forward-looking assessments. These are based upon a number of assumptions concerning future conditions that ultimately may prove to be inaccurate. Such forward-looking assessments are subject to risks and uncertainties and may be affected by various factors that may cause actual results to differ materially. No member of the LSE Group nor their licensors assume any duty to and do not undertake to update forward-looking assessments.
No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the applicable member of the LSE Group. Use and distribution of the LSE Group data requires a licence from FTSE, Russell, FTSE Canada, FTSE FI, FTSE FI Europe, YB, BR and/or their respective licensors.