Last year, we investigated the sustainability profile of the FTSE UK index and its peculiarities in the context of challenges in creating a sustainability index in the UK. In this paper, we review and update the changes over the last twelve months.
Although there were changes in the structure of the index, the broader picture remained the same. Natural resources companies continue to dominate the FTSE UK Index, which resulted in a relatively high carbon emissions and carbon reserves intensity score.
At the same time, the UK index still has a fairly high ESG score overall, with very few stocks averaging a higher ESG score and low carbon emissions intensity at the same time, and they are limited to very few specific industries.
This feature of the UK market remains a challenge for investors looking to construct benchmarks that have a high ESG score, and a low carbon reserves and carbon emissions intensity. The FTSE Russell multiple tilt approach, however, provides a solution to this conundrum