Barclays, MSCI launch green bond index family

Eligibility for the new index family is based on an assessment of securities by MSCI ESG Research based on four criteria: use of proceeds, project evaluation, management of proceeds, and reporting. Additional fixed income index criteria are then applied to identify index membership on a monthly basis. The assessment criteria and thresholds for eligibility were finalized following a market consultation.

The firms say that the indices will be useful benchmarks for both dedicated green investors and traditional fixed income investors seeking measures of green bond risks and return as part of their broader portfolio allocations. Various sub-indices by currency, maturity, sector, and use of proceeds are available as part of the new family.

This new index follows BofA Merrill Lynch Global Research’s recent launch of its own new index to track the performance of green debt.

“According to the Climate Bond Initiative, around US$30 billion to US$40 billion of green bonds will be issued this year, increasing to around US$100 billion next year,” said Brian Upbin, head of benchmark index research at Barclays. “The Barclays MSCI Green Bond Index family should prove to be an extremely useful tool for issuers and institutional investors, and its introduction marks an important step in the evolution, transparency, and standardization of the green bond market.”

Sean Kidney, CEO of the Climate Bonds Initiative, said, “The green bond market has grown enormously in recent years. The availability of market standard indices is important in establishing clear, broadly accepted guidelines for the new issuers rapidly entering the market. The stature of Barclays and MSCI will help to bring attention to green bonds.”