TSX to launch ‘green’ index
Green companies just earned an extra dose of respect from the Toronto Stock Exchange, with the launch of a new index just for environmentally-friendly outfits.
The new S& P/ TSX clean technology index, announced Thursday, is made up of 21 companies whose main business is to develop and use technologies friendly to the planet.
Its constituents range from familiar names such as Ballard Power Systems Inc., the hydrogen fuel-cell company, to more obscure names such as Burcon NutraScience Corp., which describes itself as a health and nutrition company that purifies proteins in canola and soy.
Five themes were considered as the index was formed: renewable energy with respect to production and distribution; renewable energy with respect to specialized suppliers; energy efficiency; waste reduction and water management; and low impact materials and products, the TSX said.
Among the members is the Gatineau-based Brookfield Renewable Power Fund.
The S& P already has a clean energy index for the United States, as well as a global version, but decided there was a space in the market for an index with a Canadian focus, said Jasmit Bhandal, director of S&P indexes in Canada.
Jantzi-Sustainalytics, which provides environmental, social, and governance research and analysis, developed the index’s classification system.
On the index side, companies in the volatile green tech industry need to have a minimum of $100 million in float-adjusted market capitalization, be listed on the TSX for a minimum of 12 months, and pass a minimum liquidity test, Bhandal said.
Investors will not be able to buy into this index just yet as there are currently no ETFs that are tracking the index.
“ We’re hoping that the launch of the index will generate interest so a product will be created in the future,” she said.
This will likely happen sooner rather than later, as the clean tech category is a growing component of the TSX index, with more than 120 companies listed on Canada’s two main exchanges — the most in the world.