Bloomberg to Build Out ESG Indices Offering

Bloomberg plans to further increase the depth and scope of its environmental, social, and governance (ESG) offerings by incorporating ESG into its Emerging Market Asia USD Credit index for clients in Asia.  

Ji Zhuang, head of indices for APAC at Bloomberg, says the company is also actively looking to leverage its own ESG data and scores to build a comprehensive cross-asset ESG offering, and expand into new asset classes, such as commodities and municipal bonds. This push, he says, comes as more investors are looking to incorporate ESG into their investment strategies, particularly with “a much heavier focus on climate” than in the past.

“We have also seen the product [evolve] from a value-based approach—where negative screens are applied to exclude controversial segments or index rules select best-in-class names with high ESG scores—to a more integrated approach where ESG scores are used to under/overweight issuers,” he says. 

Most recently, Bloomberg has launched optimized indices that allow clients to maximize an overall ESG score while incorporating various non-ESG constraints, such as weight deviation and turnover constraints, and these offerings can also be further customized to limit exposure on a subsector or absolute level.

More on Bloomberg’s plans after Box

Move to Asia

Bloomberg’s goal is to provide a breadth of ESG choices for its clients’ needs. It launched the family of Bloomberg Barclays MSCI Global IG ESG Fixed Income indices in 2012, and later on, introduced the Global Green Bond index in 2014. 

“Bloomberg has continued growing these offerings by expanding the Bloomberg Barclays MSCI ESG index family to Canada in 2019 to cover the Canadian debt market and in 2020 with the launch of Global HY ESG family. Being ratings agnostic, our collaboration with SASB (Sustainability Accounting Standards Board) resulted in the launch of Bloomberg SASB equity and fixed income indices,” Zhuang says.

He adds that demand for ESG indices is growing, with regional distinctions and asset gathering mainly driven by Europe. However, demand in the Americas and APAC is catching on. 

To cater to this growing interest, Zhuang will soon relocate to Hong Kong from London to run and grow a team for Bloomberg’s APAC indices business. 

“We want to support our fast-growing index client base in Asia by expanding our on-the-ground presence with deep cross-asset index product expertise,” he says. “This will enable us to respond more quickly to client requests with potentially more tailored product ideas and solutions, fulfilling regional trends and client needs through in-depth product conversations.”