Phoenix Group and FTSE Russell have launched the Climate Aware index series.

The indices look to protect policyholder portfolios against the risk of climate change by reducing exposure to companies which might face a negative impact from climate change. Index construction incorporates decarbonisation trajectories and the inclusion of forward-looking data, and Phoenix has also included its exclusion policy removing companies engaged in products and business practices that are not aligned to its sustainability principles.

Phoenix says it will be undertaking a phased introduction of these benchmarks across multiple regions starting with US equities.

Sindhu Krishna, Head of Sustainable Investment at Phoenix Group, said, “At Phoenix, we believe that transition risk will be a key climate risk factor over the coming decades as governments, corporate and customers respond to the climate emergency. Without management of those risks, our policyholders are likely to be exposed to a higher probability of sub-optimal investment performance.

“Creating these new benchmarks will also allow us to ensure that our asset management partners follow a consistent approach to implementing our climate risk management strategy across the assets they manage on our behalf.

“We are delighted to have worked with FTSE Russell to create the new FTSE Phoenix Climate Aware Index Series to create benchmarks which aim to manage and mitigate risk as we continue to seek optimal outcomes for our customers.”

Solange Le Jeune, Head of Equity Sustainable Investment Product at FTSE Russell, said, “We are thrilled to be working with Phoenix Group on the creation of these new indices. These allow Phoenix to take a climate risk mitigation approach in its core equity investments. They enable the mainstreaming of decarbonisation strategies and portfolio-level improvements on forward-looking climate parameters. This is achieved while allowing minimal deviation from the parent benchmarks. This collaboration reflects FTSE Russell’s commitment to supporting investment clients across all markets, and those, like Phoenix, with an ambition to create innovative solutions to address climate risks.”

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