illustration of world equity indices

Global index provider FTSE Russell is teaming up with investment research firm Sustainalytics to develop a new family of environmental, social and governance (EGS) indices, the two firms announced Wednesday.

The new strategic partnership is designed to meet the fast-growing demand for investment strategies that incorporate ESG factors.

“FTSE Russell is responding to a growing trend among asset owners to integrate sustainability and ESG considerations into their investment strategies and stewardship approach,” the index provider says in a news release.

To start, the firms are developing an index family based on the Russell 1000, 2000 and 3000 indices that uses new Sustainalytics ESG risk ratings. They are aiming to launch their first product in the first half of 2019.

“This is an exciting development for our clients as it will provide new tools and benchmarks. FTSE Russell has been a leader in sustainable investment for nearly two decades and has been supporting the growing demand for ESG integration into passive strategies. The partnership with Sustainalytics enables us to provide a greater selection of options and choice to meet these ever growing client demands,” says Mark Makepeace, CEO of FTSE Russell, in a statement.

“We are delighted to partner with FTSE Russell to combine our leading ESG Risk Ratings with FTSE Russell global indexes,” says Michael Jantzi, CEO of Sustainalytics, in a statement. “The focus will initially be on the Russell U.S. indices which has a leading position amongst institutional and retail investors and the partnership will provide valuable tools for ESG integration and product creation.”

Alongside the new partnership with Sustainalytics, FTSE Russell says will also continue to build its in-house sustainable investment capabilities.