LONDON & GENEVA--(BUSINESS WIRE)--Responsible investing just got easier, with the creation of a new stock index that screens US Large Cap stocks for vegan and environmental criteria.
The US Vegan Climate Index is constructed primarily by excluding from the universe of the Solactive US Large Cap index (a proxy for the S&P 500 Index) any stocks whose activities are incompatible with a vegan and climate-conscious approach to investing.
Criteria for exclusion include:
- Animal testing
- Animal-derived products
- Animals in sport and entertainment
- Fossil fuel
- Energy production from fossil fuel
- Other environmental concerns
- Military and defence
The exclusions remove approximately 41% of the market capitalization of the Solactive US Large Cap index. A breakdown by market cap of companies by reason for exclusion is:
Animal testing: 15.9%
Animal-derived products: 13.3%
Animals in sport or entertainment: 0.3%
Fossil fuel: 4.9%
Energy production from fossil fuel: 2.9%
Military and defence: 3.8%
Other environmental and human rights violations: 0.8%
The index was created by three European vegan finance professionals from Beyond Advisors, the research arm of impact investing platform Beyond Investing, spearheaded by investment analyst Claire Smith in Geneva.
“For the first time that proportion of the US stock market whose business models harm animals and the environment can be identified,” says Smith. “With reports suggesting 6% of the US population identify as vegan, Beyond Advisors anticipates demand for financial products based on this index to serve the requirements of vegans and environmentalists who do not want their money supporting businesses whose activities they oppose.”
Through its screening, the US Vegan Climate Index participates in no business activity that harms animals. As compared with an exposure to the Solactive US Large Cap index, an investor in this new index will avoid funding the slaughter of 13 animals a year for every $1,000 invested.
In comparison with the Solactive US Large Cap Index, the US Vegan Climate Index demonstrates vastly better metrics on carbon emissions, water utilization, waste products and avoidance of environmentally and socially damaging companies, with a larger proportion of the index devoted to companies that adopt environmentally positive solutions.
The rules-based US Vegan Climate Index will be calculated by index provider Solactive and published on a real-time basis under the Bloomberg ticker ‘VEGAN’. Composed entirely of US listed stocks, the index will form the basis of a forthcoming US-listed ETF launch, as well as ETFs and notes launched in other jurisdictions, subject to demand from investors.
Beyond Advisors anticipates interest in its indices not only from vegans but from environmentalists who are conscious of the damage done by animal agriculture, the second largest contributor to greenhouse gases after energy and heat production from fossil fuels. “Extraction and burning of fossil fuels is a leading contribution to environmental pollution and climate change, which is as damaging to animals as it is to humans,” says Smith. “Animal agriculture is the leading cause of species extinction, ocean dead zones, water pollution, and habitat destruction, as well as also contributing to climate change through greenhouse gas emissions.”
The average market capitalisation of the 308 companies currently listed on the US Vegan Climate Index – which include Google, Facebook and Microsoft – is $255bn, slightly higher than the Solactive US Large Cap Index.
A proportion of net profits from licensing the index, data and the issue of financial instruments will be devoted to the Beyond Cruelty Foundation, a Swiss-based Foundation whose donations will be put towards animal advocacy and saving animals from harm and exploitation.
The US Vegan Climate Index is the first of a suite of vegan and environmentally-friendly indices to be launched by Beyond Advisors.
The global responsible investment market is on a growth curve, with the number of assets professionally managed increasing 25% between 2014-2016, according to the Global Sustainable Investment Review 2016.
About Beyond Advisors
Beyond Advisors IC is a Jersey-based company owned by three experienced investment professionals who follow a vegan lifestyle: Claire Smith; Lee Coates of Ethical Investors in the UK and Ethical Money in Australia; and Larry Abele of Auriel Equity Investors in London. It was created with the aim of promoting the development of vegan investment products for the masses. Beyond Advisors is part of the Beyond Investing vegan investment platform, the brainchild of Claire Smith, who also runs Beyond Impact Advisors, which invests in companies creating plant-based, cruelty-free and animal-replacing products. Visit www.beyondfundadvisors.com.