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China launches its first carbon efficient financial index

China launches its first carbon efficient financial index

09 September 2015

The Shanghai Stock Exchange and China Securities Index today launched China’s first index of carbon efficient companies. Powered by data from Trucost, the new index aims to identify companies with financial performance that matches or exceeds their peers, but with significantly lower carbon emissions.

The SSE 180 Carbon Efficient Index is designed to help financial institutions gain enhanced financial performance that lower exposure to carbon emissions provides. China’s economic development strategy increasingly emphasizes the need for green and low-carbon growth. As a result, Chinese companies are expected to further improve their environmental performance. The new index supports this transition by channelling capital towards better performing, carbon efficient companies.

To create the carbon efficient index, Trucost assessed the carbon intensity of all companies in the benchmark SEE 180 Index using its Environmental Register database of environmental performance by more than 5,000 stock exchange listed companies and their supply chains worldwide. While the sector weighting in the carbon efficient index is consistent with that of its benchmark index, within each sector preference is given to lower emitters. Some highly carbon-intensive companies were excluded.

Simulation of the SSE 180 Carbon Efficient Index’s performance demonstrates that it can help investors minimize their carbon risk exposure while improving profits. Returns from the carbon efficient index have been 18 percentage points higher than the benchmark SSE 180 Index since July 2013. At the same time, the carbon intensity of the carbon efficient index is almost 85% less than that of the benchmark index.

Liu Zhong, vice general manager of China Securities Index, said: “In today’s China where green growth is the new norm, green indexes such as the SSE 180 carbon efficient index will provide the market with a great tool for green financial innovation, guiding more capital and more resources towards low carbon and green companies and industries, which will in turn accelerate the green growth economy.”

Neil McIndoe, head of environmental finance at Trucost, said: “With over five years of experience creating low carbon indices for leading global financial institutions, Trucost is delighted to be working with SSE and CSI to launch China’s first carbon efficient financial index. Policy moves towards higher carbon costs will make the index attractive to investors due to its significantly lower carbon exposure and better than benchmark financial performance.”

Further information

Contact: James Richens, +44 (0)20 7160 9804, james.richens@trucost.com

About the Shanghai Stock Exchange

The Shanghai Stock Exchange was founded in 1990 and is governed by the China Securities Regulatory Commission (CSRC). The SSE creates a transparent, safe and efficient marketplace for securities trading, formulating business rules, accepting and arranging listings, regulating members and listed companies, and managing and disseminating market information.

About China Securities Index

CSI, a professional business entity specializing in the development and management of indices and providing index-related services, was established in 2005 and headquartered in Shanghai. Focusing on development and management of the series of CSI indices and exchange indices, CSI has been the leading index provider in China.

As of June 2015, the total number of indices under CSI’s management reached more than 1100, covering equity, bond, commodity, fund and other asset classes. The total number and AUM of domestic funds which underlie the indices under CSI’s management hit 316 and 706.5 billion Yuan, accounting for 79.6% and 84.9% of all funds respectively, while the total number of overseas ETFs listed in 19 worldwide exchanges reached 90.

About Trucost

Trucost helps companies and investors to achieve success by understanding environmental issues in business terms. Our data-driven insights enable organizations to manage risks and identify opportunities for growth.

We are the world’s leading experts in quantifying and valuing the environmental impacts of operations, supply chains, products and financial assets. By putting a monetary value on pollution and resource use, we integrate natural capital into business and investment decisions.

With offices in Europe, the US and Asia, Trucost works with businesses worldwide to increase revenues, improve communications, meet marketplace expectations and comply with regulatory requirements.