Index provider FTSE Russell has revealed a new index, the FTSE All-World Ex CW Climate Balanced Factor Index combining a smart beta factor approach alongside climate change considerations.

Building on FTSE Russell’s ESG (Environmental, Social and Governance) benchmarks, data and analytics, the index incorporates a range of factor and sustainability parameters. The index has already been chosen by Legal & General Investment Management (LGIM) for its new Future World Fund, which HSBC Bank UK Pension Scheme has selected for its equity default option, worth £1.85 billion, in its defined contribution scheme.

The index incorporates climate change considerations through parameters of carbon efficiency, fossil fuel reserves and the green revenues of the constituents. The index construction reflects the performance of eligible securities from the FTSE All-World Index, excluding companies involved in manufacturing weapons banned under international treaties such as cluster munitions and land mines.

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