SGX Group is launching futures on the Nikkei 225 Climate Change 1.5°C Target Index, which is based on the well-known and broadly traded Nikkei 225.
This product is meant to address rising investor appetite for climate-related products.
Created by Nikkei and Wilshire, the Nikkei 225 Climate Change 1.5°C Target Index is designed to have greenhouse gas emission intensity that is 50% less than its parent Nikkei 225 and to continue reducing it by at least 7% on an annual basis.
According to SGX, this is compliant with the EU Paris-Aligned Benchmark aimed at attaining the goals of the Paris Agreement.
Managing climate change and its impact has been a key priority for Japan in recent years.
In its latest Nationally Determined Contribution, a climate action plan submitted to the UN by parties to the Paris Agreement, Japan aims for a 46% greenhouse gas emissions reduction in 2030 from its 2013 levels as part of its goal of achieving carbon neutrality by 2050.
Japan has also committed to predominantly decarbonize its domestic power sector by 2035 and end fossil fuel subsidies by 2025.
“SGX Group’s partnership with Nikkei puts us at the forefront of Japanese risk management solutions," says Michael Syn, head of equities at SGX.
“Demand for climate investing continues to grow. The Nikkei 225 Climate Change 1.5°C Target Index futures will complement SGX’s existing suite of climate-related solutions, and enhance our comprehensive Nikkei offering to investors seeking exposure to Japan’s economy,” he adds.