Euronext announced the launch of a new “low carbon” index. This index, called “Euronext ESG 80” and promoted by BNP Paribas and Société Générale, does not aim at aligning on the Paris Agreement. It only singles out companies that, among the biggest capitalizations, have the least worst climate performances. The climate impact of corporations on the index remains very high and the index does push to reduce it.
The « Euronext ESG 80 » index is based on the 300 biggest capitalizations, including big corporations whose activities raise the most environmental and climate, but also social and governance, issues. Among them, the ones that have the worst social, governance and climate practices are excluded. As Euronext’s person responsible for data and index explains: “We applied a first filter by taking out the 20% least performing companies from a social point of view, and then the 20% least performing when it comes to governance. We excluded companies involved in controversies and coal, tobacco, controversial arms and landmines”. Thus, only the worst among the worst cannot be included.
The environmental performance of companies in the new index is relative. Vinci, that builds gas and oil pipelines, even in Canadian tar sands, figures in it. Particularly, the alignment with a 1.5°C trajectory and the Paris Agreement, that requires both carbon neutrality in 2050 and a 50% drop in carbon emission by 2030, is not at all considered.
Furthermore, this new index is made in a specific context, when passive management is developing in Europe, due to the growing presence of American actors such as Blackrock and Vanguard. In France, Société Générale’s management company, Lyxor, has already 40% of its funds in passive management. Yet, this type of management is excluded from financial actors’ fossil fuel exclusion policies. Amundi applies its coal policy to a small portion of its assets under passive management while they account for 10% of its total assets, about 150 billion.
In this context, the new index should at least include fossil fuel exclusions – for all fossil fuels and not only coal – and only include companies that adopted short, medium and long term targets to align with a 1.5°C trajectory. Today, it is just one more index that financial actors can use to give themselves a greener image at little cost without having to radically change the main existing practices.