FRANCE: Euronext Launches CAC 40 Governance Index with Vigeo Eiris

Friday March 24 2017

On the 24 March 2017 Euronext and Vigeo Eiris launched the CAC 40 Governance Index, a thematic index that rates companies in the Paris market’s benchmark CAC 40 index on their corporate governance performance.

The CAC 40 Governance Index takes the constituent stocks of the CAC 40 index and weights the components based on their corporate governance score, using Equitic methodology developed by Vigeo Eiris. Equitics is based on 45 indicators that address the following four criteria:

• Responsible board practice and organisation: effectiveness, balance of power, integration of social responsibility factors
• Audit and internal controls: independence of specialised committees and review of CSR risks
• Shareholders’ rights: fair treatment and protection of minorities
• Responsible executive remuneration.

CAC 40 component stocks are classified in four groups of ten, based on their scores, and assigned a corresponding weight in the index:

• the ten top-rated companies are assigned a total weight of 40%;
• the next ten are assigned a weight of 30%;
• the ten following companies are assigned a weight of 20%; and
• the final ten are assigned a weight of 10%.

The index is calculated and disseminated like the CAC 40, except that stocks’ weighting is based not on market capitalisation but on their corporate governance performance score. This score is assigned using a questionnaire that rates the integration of social responsibility and sustainability in their processes for decision-making, control and management assessment. Index composition and weighting are reviewed quarterly, like the CAC 40 Index.

Click on the link above for further details.