STOXX, the operator of Deutsche Boerse Group’s index business, and a global provider of tradable index concepts, has launched the STOXX Climate Impact and STOXX Climate Awareness Indices.
This next generation of low carbon indices incorporates the CDP climate change scoring methodology which evaluates companies based on their progress in the transition towards a low carbon economy.
The STOXX Global Climate Impact ex Global Compact, Controversial Weapons, Tobacco Index has been licensed to the Finnish Varma Mutual Pension Insurance Company (Varma) for benchmarking purposes. This index includes only companies that show strong environmental stewardship as they have climate actions implemented.
“These indices mark a new step in the low carbon investment, as they take into account the forward-looking data used in the CDP Scoring Methodology, focusing on companies’ climate-related financial disclosures in areas like governance, strategy, risk management, targets and opportunities. This is in line with the recommendations of the Task Force on Climate-related Financial Disclosures,” says Matteo Andreetto (pictured), chief executive officer, STOXX Limited. “By contrast, the low carbon indices available in the market so far are solely based on historical carbon footprint data.”
Reima Rytsölä, chief investment officer at Varma, says: “Climate change is one of the most significant factors that investors must prepare for in the long term. We are committed to developing our investment operations so that our investments and investment processes comply with the 2-degree target.”
The new STOXX Climate Indices complement and extend the STOXX Global Climate Change Leaders Index that was based on the CDP A-List. The new indices include the first three levels of the CDP climate change scoring methodology: leadership, management and awareness. They are price-weighted with a weight factor based on the free-float market capitalisation, multiplied with the corresponding Z-score carbon intensity factor of each constituent. They are calculated in price, net return as well as gross return versions and are available in euros and US dollars. All components are subject to a cap of 5 per cent. The indices are reviewed quarterly.
The base date is 24 December 2012, with the base value set at 100. The data for the Global Compact and Controversial Weapons exclusions is provided by Sustainalytics.