Solactive AG and oekom research win competition to develop a sustainable equity index for the Federal State of Berlin

Berlin is one of the latest capitals to join the movement that has seen cities, such as Oslo and Stockholm, commit to divestment as a response to climate change.

In summer 2016, Berlin announced a plan to divest its reserve funds from companies involved in the extraction of fossil fuels (i.e. coal, oil and natural gas), or operating in disputable industries such as nuclear and arms, or that do not comply with the principles promoted by the UN Global Compact. To put the plan into action, a sustainable equity index will be developed in a joint collaboration by Solactive and oekom research. The index, which will be customized to the State of Berlin’s divesting policies, not only aims to achieve the aforementioned qualitative goals but will also allocate funds to ESG-related investment objectives, while ensuring the ease of tradability of the index constituents.

For this project, Solactive and oekom research were selected among other contestants by the Senate Department for Finance of Berlin thanks to the compelling index concept which was jointly pitched. Both Solactive and oekom research have a long track record of experience in their respective fields and this collaboration brings together the best of both worlds – expertise in ESG rating with an in-depth know-how of index construction – in a combined solution.

“We received numerous applications and concept proposals from different candidates. This highlights the fact that sustainability is becoming an increasingly relevant topic in the financial sector”, says Dr. Matthias KollatzAhnen, Senator for Finance of the State of Berlin. “I am confident that Berlin found very strong partners in Solactive and oekom research and this will enable us to set a new benchmark for sustainable investment strategies for public funds.”

Robert Haßler, CEO of oekom research, adds: “We are very much looking forward to supporting the State of Berlin with our research and data on sustainability and company-related climate risks. Our expertise as divestment advisers for municipal pioneers, such as the cities of Stuttgart and Münster, and our long lasting close cooperation with Solactive in the construction of sustainable indices, make us experienced partners for the environmental and climate plans of Berlin.”

Steffen Scheuble, Chairman and founder of Solactive, explains: “As index providers, we see a high demand for sustainability indices. A number of studies have shown that companies that do not follow sustainability strategies might lag in relative performance due to ESG related risks. Therefore, we are very proud to support –together with oekom research – the State of Berlin with our sustainability index. When defining the index concept, we put a lot of effort in coming up with the best possible combination of sustainability and tradability of the composing shares.”

Solactive is an active player in ESG indexing with approximately 30 ESG-themed indices available to invest. ESG criteria provided by sustainability specialists, such as oekom research, are used to define the starting universe from which Solactive creates indices to respond to customers’ demand. The range of ESG solutions consists of both broad market index benchmarks and smart beta indices based on both equity and fixed-income instruments. The City of Berlin will capitalize on both Solactive’ and oekom’s expertise to develop a sustainable index tailored to its divesture strategy.