As investor demand grows for transition finance strategies and portfolio alignment with emission reduction targets, and with data becoming more advanced and nuanced, indices are playing an increasingly key role in directing capital towards the low-carbon economy.
Their relevance in financial markets as vehicles of climate-focused corporate engagement is indisputable. According to Morningstar Direct, there was USD 255 billion invested in climate transition funds globally as of March 31, 2025.
STOXX introduced its first low-carbon indices in 2016. Since the beginning, all products have been developed through a consultative and collaborative approach with partners. Each index has been built around clients’ specific investment criteria and objectives — from investable universe, sustainability goals, tracking error and optimization requirements, to the employment of specific climate and ESG data.
Our position as a pioneer in climate indices is underpinned by a leading team of developers, extensive data sourcing, robust in-house research capabilities and deep customization expertise. The 2023 merger with ISS expanded those possibilities, allowing the new ISS STOXX to provide climate solutions along the entire investment cycle. Leading-case collaborations with public and private partners — including the prestigious Ambition Climat mandate — are testament to our work.
ISS ESG offers carbon and climate data, analytics and advisory services across asset classes. The industry-leading data includes over 750 different current and forward-looking carbon and climate indicators such as:
- Scope 1-3 emissions information for 38,500 issuers
- alignment with multiple climate scenarios
- net-zero solutions
- transition risks
- physical risks assessment
- financial impact quantification
This is supported by senior climate experts and continuous innovation through new product and methodological developments across carbon accounting, and transition, physical and nature-related risks.
Extensive family of strategies
Today, the STOXX Climate indices comprise five families, each offering a distinct approach based on rules-based and transparent methodologies. We continuously ensure the indices are aligned with changing regulation and market preferences. That transparency, up-to-date and objective rulebooks, and liquidity criteria have made the indices popular as underlyings for derivatives, ETFs, index funds and structured products. The indices are listed below.
STOXX’s Climate indices suite
The STOXX Low Carbon indices marked STOXX’s first entry in the Climate index segment. The indices exclude companies based on their current carbon intensity (emissions/revenue) and were designed to help investors decarbonize their portfolios and limit the exposure to climate-related risks. There are four families of Low Carbon indices: Low Carbon, Reported Low Carbon, Industry Leaders and Low Carbon Footprint.
The Climate Change suite not only decarbonizes the portfolio, but also applies a best-in-class approach to select companies according to their preparedness and progress in the transition towards a low-carbon economy.
The Climate Change Leaders, Climate Impact and Climate Awareness indices respectively and progressively incorporate — in this order — companies that are leading through action in terms of climate change, are managing the effect of climate-related factors, and those that understand and have looked at the implications of climate and environmental issues.
STOXX has partnered with CDP, whose climate change scoring methodology is employed to classify companies along their climate-action ranking scale.
The WTW CTI indices tilt away from companies with high exposure to climate-transition risk based on WTW’s exclusive Climate Transition Value at Risk (CTVaR) measure. CTVaR assesses the anticipated impact of a climate transition on company valuations through a forward-looking, bottom-up analysis that looks beyond carbon emissions. Companies not only are impacted by growing physical liabilities but are also faced with operational, business and market issues as policymakers and societies step up efforts to meet carbon-reduction goals.
The CTVaR measure analyzes the impact on projected company cash flows of moving from a ‘business-as-usual’ scenario to a world consistent with the goals of the Paris Agreement, using today’s prices.
The PABs and CTBs follow and exceed the requirements in the EU Climate Benchmarks regulation. PABs encourage climate stewardship and corporate engagement to align with the global warming target of the Paris Climate Agreement, while CTBs form a portfolio on a decarbonization trajectory. PABs aim for 60% GHG intensity reduction relative to the starting universe, while CTBs aim for a 40% GHG decrease. Both indices additionally seek 7% year-on-year decarbonization.
The ISS STOXX Net Zero Transition indices are a next-generation, optimized set aligned with net-zero targets, focused on real-world metrics and encompassing of all industries, including high-emitting ones. The indices follow the International Energy Agency’s Net-Zero Pathway, seeking to meet the 2050 carbon budget by 2040. They also incorporate sector-specific performance indicators and keep the expected tracking error below 1%.
Performance
Exhibit 1 shows a comparison of climate-related and performance metrics between indices in the different STOXX Climate families. The table highlights how the investment approaches vary in outcomes as much as they do in methodologies.
Exhibit 1: Comparative sustainability and returns performance of STOXX climate indices
A shifting reality
Advances in research and technology are driving the evolution of climate-focused portfolios, in time for heightened action as the world nears the 2050 target of keeping global warming below 1.5°C.
Transition investing is complex, with multiple variables at play, including supporting real economy decarbonization, economic impact, regulation, stewardship and engagement. Moreover, not all investors can — or want to — approach the risks and opportunities of the low-carbon economy in the same way.
In response, STOXX offers a comprehensive family of Climate solutions. For many investors, indices represent the most accessible and efficient means of implementing climate strategies, additionally bringing cost and disclosure advantages. Index inputs including forward-looking carbon metrics, scenario analysis, biodiversity impact and net-zero alignment are essential for building modern, low-carbon portfolios.
ISS STOXX is proud to collaborate with partners and the broader industry in advancing shared objectives in a world undergoing a climate transition.