Stock exchange and sustainability, coming soon Mib Esg index changes

Changes are coming for the Mib Esg index of Piazza Affari. Euronext, the company to which the Milan Stock Exchange belongs, will change its methodology from June. This work has been going on since last year when the Esg rating agency Morningstar Sustainalytics took over from Moody's as Euronext's consultant. The change in methodology will also affect the French Cac40Esg index.

The new methodology, before being adopted, was subject to public consultation with Euronext stakeholders. Among the filters used to select the shares to be included in the Mib ESG index are trading volume, free float and market capitalisation. More specifically, in the area of ESG, companies that are not aligned with the Global Compact principles and with the principles relating to Business and Human Rights, in both cases desired by the UN, will be excluded; in addition, companies will also have to comply with the OECD guidelines on multinationals and the conventions of the ILO, the International Labour Organisation.

The screening does not end there. The turnover of companies to be included in the index must not be generated by a number of sectors; for each of these there are percentage thresholds to be met, as in the case of fossil fuels. There is no threshold instead for controversial weapons, i.e. anti-personnel mines, cluster bombs and chemical-biological weapons. A sector, the latter, that in Italy has long been in the spotlight of politics and financial intermediaries. Italy has in fact signed the Ottawa and Oslo treaties (anti-personnel mines and cluster bombs) and implemented these conventions in Law 220 of 2021. Legislation that has created controversy among banks, foundations, management companies and Sims as already documented in Plus24 of 8 March.

Finally, the carbon footprint of companies will also play a key role in the evaluation of companies to be included in the Mib ESG index of Piazza Affari.

Euronext also announced further initiatives, using and translating the acronym Esg in another way; where 'New Esg' stands for Energy, Security and Geostrategy. "This package of initiatives," reads a note, "led by Euronext, will increase the visibility of European companies active in strategic sectors and provide them with unprecedented tools to meet their financing needs through simplified access to capital. It goes on to emphasise that 'the 'New Esg' solutions are also designed to respond to the growing demand from asset managers, institutional and retail investors, eager to gain better exposure to high-growth segments through thematic indices'.