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Press Releases — March 20, 2023

Paris-aligned ESG STOXX indices licensed to four German pension funds

  • Pension funds enhance their sustainability standards
  • Indices follow the EU Paris-aligned Benchmark requirements
  • Assets amount to €11 billion

ZUG (20 March 2023) – Qontigo has licensed the global STOXX ESG Länder PAB Index family to four German federal states. PAB (Paris-aligned Benchmark) stands for the most ambitious EU regulation regarding fossil exclusion criteria and greenhouse gas decarbonization for index providers. The indices will serve as passively replicated benchmarks for the pension funds of Baden-Wuerttemberg, Brandenburg, Hesse, and North Rhine-Westphalia. They upgrade the STOXX fossil-free indices the states had previously used to the new PAB standard. The invested assets amount to €11 billion.

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“We are very glad that we could find consensus with our colleagues in Brandenburg, Hesse and North Rhine-Westphalia to jointly implement a new methodology that incorporates the 1,5-degree-target of the Paris agreement and exclusions for activities with significant harm to EU taxonomy objectives or one of the UN sustainable development goals.”

Dr. Danyal Bayaz, Minister of Finance in Baden-Wuerttemberg

Baden-Württemberg uses the global STOXX ESG Länder PAB Index family in response to the new Sustainable Investment Act that was just passed by the regional parliament.

“Together with Baden-Wuerttemberg, Brandenburg, and North Rhine-Westphalia, we are showing how sustainable investments are possible and that the public sector can and should be a role model and driving force here. With the new Climate Plan Hesse, the Hessian Government has just shown a path on which Hesse can become climate neutral by 2045 at the latest. An important step in following this path are sustainable capital investments.”

Michael Boddenberg, Minister of Finance in Hesse

“We are pleased to further intensify our cooperation with the pension funds of four German states. Our cooperation started in 2019 when we designed four sustainability indices for these funds. With the STOXX ESG Länder PAB Indices they are taking their sustainable commitment even further.”

Axel Lomholt, Chief Product Officer for Indices & Benchmarks at Qontigo

The indices are constructed to follow the EU Paris-aligned Benchmark requirements. This includes the exclusion of companies that are harmful to the environmental objectives of the EU taxonomy. Going beyond the PAB standard, companies are excluded if they significantly obstruct any of the 17 United Nations Sustainable Development Goals. Moreover, the indices avoid investing in ESG-laggards by applying an ESG best-in-class approach. The calculation of these indices also uses Qontigo´s analytics tools to fine-tune the weight of the constituents.