S&P Drops Twitter, Walmart, Other Big Names From ESG Index
May 07 2020 - 3:17PM
Dow Jones News
By Dieter Holger
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 year's rebalance of the S&P 500 ESG Index,
the New York-based ratings agency firm now excludes Equifax Inc.
and ViacomCBS Inc. for landing in the bottom quarter of
environmental, social and governance scores among S&P 500
members. It also kicked out Twitter since it had a low score under
the United Nations Global Compact.
S&P said it replaced Walmart Inc. with Costco Wholesale
Corp. because its ESG score fell below its industry peers.
In response to S&P's decision, a Walmart spokesperson said
the company hasn't "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."
"We stand by our ESG work which has been recognized by others,"
the spokesperson added.
Twitter declined to comment. Equifax and ViacomCBS didn't
immediately respond to requests for comment.
Other well-known companies that S&P excluded were Clorox
Co., Ford Motor Co., Nordstrom Inc. and Southwest Airlines Co., but
it said these were actually eligible based on their ESG performance
and were removed at the firm's discretion.
Companies S&P added to the index include American Airlines
Group., Royal Caribbean Cruises and DTE Energy Co.
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.
S&P said the index has seen higher performance than the
parent S&P 500 year-to-date, returning 2.68% above the
traditional index in the last year.
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.
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, which now
holds more than $100 million in assets.
Invesco Ltd. also has exchange-traded funds tracking the index:
the Invesco S&P 500 ESG Index ETF listed in Canada and the
Invesco S&P 500 ESG UCITS ETF listed in Europe.
In January, S&P and BlackRock Inc., the world's largest
money manager with close to $7 trillion in assets, agreed to create
ESG versions of S&P's flagship indexes to launch new
sustainable funds.
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.
Write to Dieter Holger at dieter.holger@wsj.com;
@dieterholger
(END) Dow Jones Newswires
May 07, 2020 15:02 ET (19:02 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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