S&P Global Inc. said Wednesday that it kicked out big-name companies and added others to its sustainable version of its bellwether S&P 500 index, a move that will impact a growing swath of investments tied to the benchmark.<\/p>\n
Following this years rebalance of the S&P 500 ESG Index, the New Yorkbased ratings agency firm now excludes Equifax Inc. EFX, -0.85% and ViacomCBS Inc. VIAC, -0.66% VIACA, 0.00 for landing in the bottom quarter of environmental, social and governance scores among S&P 500 members. It also kicked out Twitter TWTR, -1.27%, since it had a low score under the United Nations Global Compact.<\/p>\n
S&P said it replaced Walmart Inc. WMT, +0.56% with Costco Wholesale Corp. COST, +1.25% because its ESG score fell below its industry peers.<\/p>\n
In response to S&Ps decision, a Walmart representative said the company hasnt been engaged in a discussion or exchanged information with anyone from S&P regarding the S&P 500 ESG Index. ESG rating systems are evolving and current methodologies are inconsistent across rating organizations.<\/p>\n
We stand by our ESG work which has been recognized by others, the spokesperson added.<\/p>\n
Twitter declined to comment. Equifax and ViacomCBS didnt immediately respond to requests for comment.<\/p>\n
Other well-known companies that S&P excluded were Clorox Co. CLX, +1.35%, Ford Motor Co. F, -2.56%, Nordstrom Inc. JWN, -4.93% and Southwest Airlines Co. LUV, -2.53%, but it said these were actually eligible based on their ESG performance and were removed at the firms discretion.<\/p>\n
Companies S&P added to the index include American Airlines Group AAL, -2.46%, Royal Caribbean Cruises RCL, -4.65% and DTE Energy Co. DTE, -2.74%. <\/p>\n
After screening out companies involved in tobacco or controversial weapons or with a low United Nations Global Compact score, the S&P 500 ESG Index aims to hold as many companies with high ESG scores by targeting 75% of the parent benchmark market cap by specific industry groups.<\/p>\n
See: MarketWatchs complete coverage of climate change and corporate responses<\/p>\n
S&P said the index has delivered better performance this year than the S&P 500 SPX, -0.25% benchmark; its down just less than 10.5% in 2020, while the S&P 500 is down 10.8%. Over the past 12 months, the ESG index is down 0.2%, while the S&P 500 is now up nearly 0.4%.<\/p>\n
As of the 2020 rebalance, 311 members of the S&P 500 made it in the index and 56 were excluded, while another 138 were eligible but not selected.<\/p>\n
Meeting sustainability standards has become increasingly important for companies as a growing wave of investments are tied to ESG performance. S&P has licensed the S&P 500 ESG Index for funds, including the Xtrackers S&P 500 ESG ETF SNPE, -0.08%, which now holds more than $100 million in assets.<\/p>\n
Invesco Ltd. also has exchange-traded funds tracking the index: the Invesco S&P 500 ESG Index ETF listed in Canada ESG, +2.67% and the Invesco S&P 500 ESG UCITS ETF listed in Europe.<\/p>\n
In January, S&P and BlackRock Inc. BLK, -1.17%, the worlds largest money manager with close to $7 trillion in assets, agreed to create ESG versions of S&Ps flagship indexes to launch new sustainable funds.<\/p>\n
BlackRock forecasts that sustainable investments in exchange-traded and index funds will soar to $1.2 trillion by 2030. It said there is around $220 billion in such funds currently.<\/p>\n
Read on:Fund giant BlackRock issues stewardship playbook as a proxy-season test and SEC rulings loom<\/p>\n
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Twitter, Walmart, Equifax and others dropped by S&P from its ESG index, while Costco is newly included - MarketWatch<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" S&P Global Inc. said Wednesday that it kicked out big-name companies and added others to its sustainable version of its bellwether S&P 500 index, a move that will impact a growing swath of investments tied to the benchmark. Following this years rebalance of the S&P 500 ESG Index, the New Yorkbased ratings agency firm now excludes Equifax Inc Continue reading