Cambridge University introduces a new international bond index
Bloomberg Cambridge University Fixed Income Index: A New Tool for Corporate Emissions Reduction
The Bloomberg Cambridge University Fixed Income Index is a groundbreaking bond market benchmark designed to give asset owners more influence over corporate emissions reduction, particularly in the construction of new fossil fuel infrastructure.
The index, a collaboration between Bloomberg Index Services Limited (BISL) and the University of Cambridge, incorporates data methodologies from both organizations. It covers a wide range of sectors, including fossil fuel companies, utilities, insurance, and financial sector companies.
The index's influence on corporate emissions reduction and fossil fuel finance stems from its ability to guide investment decisions and shift capital flows. Asset managers and fiduciaries often track and replicate these indices, integrating environmental, social, and governance (ESG) criteria, including emissions risks, into their portfolios.
In the context of fossil fuel finance, the index influences emissions through capital allocation and risk signaling. Funds tracking or benchmarked to this index may steer capital away from high-emission fossil fuel issuers and towards green or lower-carbon bonds if ESG factors are incorporated into index construction or selection criteria.
Moreover, the index’s performance and composition may signal market risks associated with fossil fuel-related bonds, especially as climate-related regulations and transition risks impact these companies. This can encourage corporations to reduce emissions to maintain access to lower-cost capital.
Although the exact ESG or fossil fuel exclusion policies of the Bloomberg Cambridge University Fixed Income Index are not detailed in the search results, market trends show increasing pressure on fixed income indices and investors to support emission reductions through selective investment and engagement with corporate issuers.
The innovation of the index lies in its selection strategy, which selects companies based on current emissions reduction activities. It favors companies phasing down their fossil fuel activities in line with the Paris Agreement and excludes those that are not.
The index's creation was announced on 11 April 2025, by the University of Cambridge, following advice from Dr. Ellen Quigley, a researcher at the University. The UN Joint Staff Pension Fund (UN JSPF) has announced its intention to join the University of Cambridge in allocating capital to the index following its launch later this year.
Academics, including the University of Edinburgh's Theodor Cojoianu and his co-authors, have estimated that around 90% of new capital pouring into fossil fuels is attributable to debt markets. This underscores the potential impact of the Bloomberg Cambridge University Fixed Income Index on the financing of fossil fuel projects.
Dave Gedeon, CEO of BISL, commented that Bloomberg transition risk analytics supports Cambridge's innovative methodology, transforming the index into a tool for asset owners to achieve their goals of engaging corporations for impacting change in the real economy. Pedro Guazo, a representative of the UN secretary general for JSPF investments, expressed excitement about being part of the initiative, as it allows asset owners to invest responsibly with an index that enables them to do so. Anthony Odgers, Chief Financial Officer at the University of Cambridge, stated that the index is a game-changer for the growing number of asset owners who invest in corporate debt and understand its impact on fossil fuel expansion.
In conclusion, the Bloomberg Cambridge University Fixed Income Index represents a significant step forward in the fight against climate change. By providing asset owners with a tool to guide their investments towards lower-emission companies and away from high-emission fossil fuel issuers, it has the potential to significantly impact the financing of fossil fuel projects and encourage corporations to reduce their emissions.
The Bloomberg Cambridge University Fixed Income Index, a tool announced on 11 April 2025, is designed to guide asset owners in investing towards lower-emission companies, particularly in sectors like fossil fuel, utilities, insurance, and finance. By influencing capital allocation and risk signaling, this index can steer funds away from high-emission fossil fuel issuers and towards green or lower-carbon bonds that support environmental-science initiatives, such as climate-change mitigation.
