Exchange operator Cboe Global Markets has announced plans to list options on the S&P 500 ESG Index beginning September 21, 2020, further expanding Cboe’s suite of products tied to S&P Dow Jones Indices (S&P DJI), pending regulatory review.

Cboe S&P 500 ESG Index options provide representation of companies meeting S&P DJI’s environmental, social and governance (ESG) factors, while offering investors a risk-return profile similar to that of the S&P 500 Index. The new options are expected to have particular utility for market participants seeking an efficient way to gain exposure to or hedge the U.S. equity market that meets sustainability criteria.

The S&P 500 ESG Index is a broad-based, market cap-weighted index that measures the performance of securities meeting sustainability criteria, while maintaining similar overall industry group weights as the S&P 500® Index. The S&P 500 ESG Index aims to align investment objectives with ESG values, moving ESG from the fringe of market participants’ portfolios to the core.

ESG investing has become a major issue on Wall Street, with many investors wanting to know that their investments are ESG-friendly. For example, former Bank of England (and Canada) governor Mark Carney recently joined Brookfield as Head of ESG and Impact Fund Investing.

“Many market participants across the globe are increasingly pursuing a sustainable investing agenda that aligns with their own environmental, social and governance preferences,” said Ed Tilly, Chairman, President and Chief Executive Officer at Cboe Global Markets. “The new Cboe S&P 500 ESG Index options are designed to respond to this growing demand from the marketplace by offering an additional tool that can provide global participants of all sizes with ESG representation within their portfolios, while enabling them to efficiently trade and manage their risk preferences.”

“We are excited that Cboe is launching options based on the S&P 500® ESG Index. This latest development evolves the growing ecosystem of investable products tracking this leading ESG benchmark. Together, these products make sustainable investing possible and efficient for a wider range of market participants globally,” said Reid Steadman, Global Head of ESG Indices at S&P Dow Jones Indices.

The new contracts will complement Cboe’s exclusive suite of S&P DJI Index options, which include S&P 500 Index (SPX) options, in standard and mini, one-tenth contract size (XSP), with A.M. and P.M. settled weekly and monthly expiring contracts, and options on S&P Select Sector Indices with monthly expiring contracts. Cboe S&P 500 ESG Index options also offer market participants the benefits of cash settlement and European-style exercise. Investors can also customize the key contract specifications with FLEX® options. The index and settlement values are available over the Cboe Streaming Market Indices (CSMI) feed.