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S&P Dow Jones to include carbon metrics

  •  
By Jessica Yun
  •  
2 minute read

Financial market index provider S&P Dow Jones Indices has announced its website will publish carbon metrics alongside financial metrics for all its equity indices.

In a statement released yesterday, S&P Dow Jones said growing importance of “carbon considerations” was driving its decision to publish the metrics, which utilises data from Trucost, on its website.

“The initiative is part of S&P DJI’s commitment to support ESG transparency enabling market participants to understand, measure and manage carbon risk,” the statement said.

S&P Dow Jones Indices senior director of strategy and ESG indices Hannah Skeates said carbon metrics were “likely to become commonplace”.

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“Once market participants understand their carbon exposure, they can begin to find solutions to manage this exposure and potential risk,” Ms Skeates said.

“Whether reducing carbon exposure through a broad market low carbon strategy, or via fossil fuel divestment, S&P Dow Jones Indices has indices – and the carbon metrics to measure it.”

According to the statement, the three carbon metrics published on the website are:

  • Carbon Footprint – metric tons of CO2e (carbon dioxide equivalent) per US$1 million invested against the index;
  • Carbon Efficiency – metric tons of CO2e per US$1 million of a company’s revenues against the index; and
  • Fossil Fuel Reserve Emissions – the greenhouse gas emissions that could be generated if the proven and probable fossil fuel reserves owned by constituents were burned per US$1 million invested.
In comparing the returns of six versions of the S&P 500 Index in a report titled Stepping Up to Carbon Transparency, S&P Dow Jones argued against the myth that low-carbon indexes delivered lower returns.

“The low-carbon versions of the S&P 500 actually outperformed the benchmark over the five-year period,” the report said.

In December last year, NAB Asset Servicing also launched a tool allowing clients to assess the carbon intensity of their investments.

S&P Dow Jones to include carbon metrics

Financial market index provider S&P Dow Jones Indices has announced its website will publish carbon metrics alongside financial metrics for all its equity indices.

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