The Lima Stock Exchange (BVL), with the help of S&P Dow Jones Indices (S&P DJI), the world’s leading provider of indices, incorporated the index in November ASG, which includes environmental, social and governance criteria, replacing the S & P / BVL IBGC index.
Nadia Malpartida, Manager of Sustainability and Climate Change Services at EY Peru, expressed that the inclusion of the new indicator may recognize those companies that are better prepared to respond to emerging sustainability opportunities and challenges in the Peruvian market.
How does the new indicator of the BVL work?
Currently, the index has 15 companies from five sectors, according to the Global Standard Industrial Classification (GICS) of S&P Dow Jones Indices. 38.3% corresponds to the materials sector; 32% to Finance; 15.8% to basic necessities; 9.6% to the industrial sector; and 4.4% to public utility goods.
On the other hand, ESG scores not only measure the transparency of companies and the integrity of their public information, but also consider for the evaluation the performance of companies in the context of ESG matters.
The methodology used by S&P DJI takes into account the main ESG data available in the market, both positive and negative performance, and rewards those companies that disclose information on important topics that are usually not communicated enough, and whose relevance is growing for investors.
“It is important to take into account the ESG criteria because more and more investors, consumers, professionals and other stakeholders are interested in companies that meet these criteria. This interest is not a fad, but a trend that has been maintained over time ”, adds the EY Peru expert.
Finally, regarding the selection methodology, each rebalancing automatically selects all the companies in the eligible universe with an S&P DJI ESG score greater than or equal to the median.
Constituents will remain in the index if they maintain an S&P DJI ESG score that is equal to, higher than, or within 25% below the median score. However, there are exclusions based on non-compliance with the principles of the United Nations Global Compact, commercial activities of ASG or participation in disputes of ASG according to the media and interest group analysis of S&P Global (or MSA for its acronym in English).
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