Index provider Solactive has launched a family of six low carbon equity indices offering global and regional exposures, including smart beta versions.
Solactive said that in the wake of the COP21 climate conference in Paris, there had been encouragement of climate themed strategies and commitments by investors to lower their exposures to greenhouse gas emissions.
Solactive said it had responded by working with South Pole Group, a provider of sustainability solutions, to develop the new low carbon index family, which can be used by investors to “contribute to climate change mitigation and adaptation efforts whilst reducing climate change related investment risks.”
The six indices are based on US or European broader market benchmarks, and uses a combination of two approaches. The first is to exclude companies with “comparatively high greenhouse gas emissions”, which are analysed on a sector by sector basis to take account of different levels of carbon exposure per sector. The second approach is to exclude companies companies that are not taking steps to implement a “meaningful climate risk mitigation or adaptation strategy”.
The index components are also weighted for their free float market capitalisation, while the smart beta versions of the index family use a high dividend, low volatility approach.
The six indices are:
- Solactive SPG Europe Low Carbon Index
- Solactive SPG Eurozone Low Carbon Index
- Solactive SPG Europe Low Carbon High Dividend Low Volatility Index
- Solactive SPG Eurozone Low Carbon High Div Low Volatility Index
- Solactive SPG US Low Carbon Index
- Solactive SPG US Low Carbon High Dividend Low Volatility Index