CHAPTER 15

ESG Indexes

Methodologies of ESG, climate and thematic benchmarks

Opening question

“An ESG index fund says it tracks a 'sustainable' version of the world index. How is that index built — and how different is it from the market?”

In this chapter

The families of ESG indexes: screened, best-in-class, tilted, climate and thematic
How a methodology moves from universe to eligibility, selection and weighting
Score tilting and capping, with a worked example
Climate and thematic benchmarks in index form
Tracking error and active bets against the parent index, with a worked example
The case study of the NXW Global ESG Leaders index
How to read an index methodology document
The sustainability index of the Ho Chi Minh City Stock Exchange

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This chapter is in the full book

Chapter 1 is free to read online. The full text of chapter 15 — with its tables, figures, worked examples and practice lab — is available in the complete edition of ESG and Sustainable Investing: From Theory to Practice — Vietnam Readiness (Volume 4, NXW Investment Library).

Read Chapter 1 free Get the full book — [email protected]

Sections of this chapter

15.1 Why ESG indexes matter

15.2 Families of ESG indexes

15.3 Universe and ESG eligibility

15.4 Selection: best-in-class and coverage

15.5 Weighting and tilting

15.6 Climate and thematic benchmarks

15.7 Tracking error and active bets

15.8 Case study: the NXW Global ESG Leaders index

15.9 Reading an index methodology

15.10 The Vietnam sustainability index

← Chapter 14: Climate Transition and Portfolio Alignment Chapter 16: ESG Funds and ETFs →