Ethical Investment Opportunities – A Look Into Cboe's S&P 500 ESG Index Options

With the release of S&P 500 ESG Index Options, Cboe Global Markets Inc. CBOE offers investors the opportunity to invest in companies with a strong environment, social and governance (ESG) score while offering a risk and return profile similar to the S&P 500. 

Cboe’s S&P500 ESG Index Options offer exposure to 75% of the S&P 500’s market capitalization by industry. It’s an industry-leading index created by the S&P Dow Jones Indices using proprietary ESG scores, which focus on the most financially material and relevant ESG signals within specific industries. S&P 500 ESG Index options are easy to trade long and short, and they’re cash-settled, meaning there’s no risk of early assignment. 

Many unethical business practices have been exposed in recent times, making the public more ethically conscious of their investing decisions. Human rights abuses in cobalt mining, price gouging in life-saving drugs, and greenhouse gas emissions have all taken a spotlight in the media throughout the last five years, prompting global and governmental interventions on corporate practices. 

Cboe’s S&P 500 ESG Index options offer exposure to companies that have been investigated for confirmation of their ESG principles. Companies under the “Mining & Minerals” umbrella, for example, are drilled for their payment transparency, mineral waste management, water-related risks, and community impact before being given an ESG score. Similarly, companies in the “Restaurants” category are scrutinized for their local impact on business operations, customer relationship management, and raw material sourcing. 

Source: Cboe Global Markets

As the figure above demonstrates, the S&P 500 ESG Index is highly correlated with the broader S&P 500 Index. As such, it offers investors very similar returns and risks while ensuring the companies they invest in are a little more ethically, socially and environmentally conscious. 

Click here to learn more about Cboe’s S&P 500 ESG Index. 

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