S&P Indices and Tokyo Stock Exchange, Inc. announced today the launch of the S&P/TOPIX 150 Carbon Efficient Index, which comprises all Japanese companies included in the S&P/TOPIX 150 re-weighted to reflect the level of carbon emissions produced by each, while simultaneously tracking the S&P/TOPIX 150 as closely as possible.
The S&P/TOPIX 150 Carbon Efficient Index retains the same constituents as the underlying S&P/TOPIX 150 created in cooperation with the Tokyo Stock Exchange (“TSE”), but utilizes the Carbon Footprint metric to compare the relative emissions of different companies within particular sectors and adjust the weight of each component within the index accordingly. The Carbon Footprint metric is calculated by Trucost Plc and is defined as the company’s annual greenhouse gas (GHG) emissions assessment, expressed as tons of carbon dioxide equivalent (CO2e), divided by annual revenues. As a result, the S&P/TOPIX 150 Carbon Efficient Index tracks the performance of the underlying index to within 1%, while offering far lower total carbon emissions exposure for the index portfolio as a whole.
“We are glad to be bringing the S&P/TOPIX 150 Carbon Efficient Index to a Japanese audience,” says Alka Banerjee, Vice President at S&P Indices. “Carbon footprint measurement is a critical dimension of the new investment universe, and investors are increasingly seeking platforms that can take into account carbon emission ratings and reflect the true cost of doing business. Through this Index, Japanese companies will also come to further understand and appreciate the financial and other business benefits conferred by reducing their carbon footprints.”
“The Tokyo Stock Exchange is pleased to work with S&P to create this novel and important index offering,” added Moriyuki Iwanaga, Executive Officer at Tokyo Stock Exchange. “As a responsible and forward-looking international exchange, the TSE is aware of the importance of providing financial tools and platforms to actively promote investment in environmentally friendly companies. We are confident that the S&P/TOPIX 150 Carbon Efficient Index will help confirm the TSE’s reputation as an environmentally-conscious institution, while providing new opportunities for investors and financial companies in Japan.”
"Trucost is delighted to work with S&P to calculate and analyse the carbon footprint of the S&P/TOPIX 150 Carbon Efficient Index. This will enable investors using the index to shift their investment towards carbon-efficient companies," commented Neil McIndoe, Head of Environmental finance at Trucost. "It will offer encouragement to listed companies in Japan to transition towards low-carbon fuels, technologies and processes. Given the close correlation between energy use and carbon emissions, investors will also benefit from reduced risk from rising input costs currently affecting corporate profitability."
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