In an era where the environmental protection and sustainability have become undisputed priorities to preserve the integrity of our planet, investing in companies that have a low potential negative impact on biodiversity is configured as a responsible choice.
Biodiversity underpins all economic activity making available a range of goods and services such as food, water and other vital elements. From forests to farmland to oceans, our planet’s ecosystems are the foundation of a resilient economy. According to the World Economic Forum, more than half of world GDP depends moderately or heavily on nature and its services[1].
Despite the value that nature provides, this is degraded faster and faster[2]:
The rate of global change in nature over the past 50 years is unprecedented in human history; 75% of the earth and 66% of its oceans have been altered by human activity and many vital ecosystems are being eroded[3];
$1.9 trillion linked to biodiversity loss is at stakewhich contributes to intensifying natural hazards, according to a Moody’s report[4].
Take a position on the most virtuous companies in terms of impact on biodiversity, with a capital protection mechanism at maturity
To be exposed in a diversified way to a basket of shares that have a lower expected negative impact on biodiversity, General Society (SG) issued on the EuroTLX segment of Borsa Italiana a new certificato Callable Equity Protection 100 linked to the Solactive Transatlantic Biodiversity Screened 150 CW Decrement 50 equity index.
New product with ISIN is XS2395036325 is classified as capital protected certificate according to the Acepi classification, a category of certificates that is now increasingly offered on the market in the light of the context of higher interest rates. For this issue SG has decided to focus on a mechanism called “Callable”, innovative for the world of certificates, which provides that the early recall is not linked to a specific barrierbut it can happen at the issuer’s discretion. The maximum deadline is set at 23 July 2027.
Recall premium and protection of 100% of the Nominal Value at maturity
The new Callable Equity Protection 100 provides on a monthly basis (from the 6th to the 47th month) the possibility, at the discretion of Societe Generale, to call the products in advance, paying, in this case, a gross settlement amount equal to 100% of the nominal value (1,000 euros) increased by the gross recall premium of 1% multiplied by the number of months that have elapsed since the issue of the products (gross yield of 12% expressed on an annual basis).
For example, if the early call option is exercised by the Issuer at the end of month 10, the certificate will pay a gross settlement amount equal to 110% of the nominal value (100% + 1%x10). Since the nominal value is 1,000 euros per instrument, the investor will receive 1,100 euros gross in this case.
In the event that the Issuer decides not to exercise early recall during the life of the certificate, on the expiration date (July 23, 2027) are looming two possible repayment scenarios:
If, on the Final Valuation Date (16 July 2027), the price of the Underlying Index is at or above its Initial Level (100%), the Investor will receive a Gross Liquidation Amount equal to 100% of the Nominal Value plus the (positive) performance of the index, without cap; if, on the other hand, the underlying index is worth less than its initial level (100%), the certificate will redeem the minimum redemption amount equal to 100% of the nominal value.
How companies within the index are selected
The Solactive Transatlantic Biodiversity Screened 150 CW Decrement 50 Underlying Index is an equity index established, calculated and published in real time by Solactive AG.
The underlying index tracks the performance of a basket of 150 shares (100 listed in the US and 50 listed in the Eurozone) selected by applying ESG exclusion filters, stock liquidity filters, exclusion filters based on the potential negative impact of companies in terms of biodiversity and filters related to market capitalization.
The filter linked to biodiversity score it is based in particular on data provided by Iceberg Data Lab, a company at the forefront of the development and application of tools to measure and manage the impacts of societies on biodiversity. The biodiversity score takes into account a society’s land use, nitrogen deposition, greenhouse gas emissions, and release of toxic compounds.
Finally, it should be noted that the value of the underlying index is calculated by reinvesting the gross dividends paid by the companies that are part of it, subtracting a daily synthetic dividend equal to 50 index points on an annual basis.
For more information, visit the Societe Generale website: https://prodotti.societegenerale.it/product-details/XS2395036325
[1] https://www.weforum.org/press/2020/01/half-of-world-s-gdp-moderately-or-highly-dependent-on-nature-says-new-report/
[2] https://www.unep.org/un-biodiversity-conference-cop-15
[3] According to the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES)
[4] Moody’s Has a $1.9 Trillion Warning Over Biodiversity, Bloomberg, September2022