Carbon indices launch

WELLINGTON: The NZX has launched New Zealand’s first carbonefficient indices to tap into growing investor demand for environmentally friendly stocks.

The exchange said it had launched the indices in partnership with S&P Dow Jones Indices to recognise investor interest in reducing carbon emissions in addressing climate change.

Two new indices, the S&P/ NZX 50 Carbon Efficient Index and S&P/NZX 50 Portfolio Carbon Efficient Index, use a Trucost environmental dataset to weigh companies listed on the NZX according to their carbon intensity and sector impact.

Londonbased Trucost, part of S&P Global, makes estimates about the hidden costs of unsustainable use of natural resources by companies.

The NZX said the objective behind the new indices was to incentivise New Zealand companies to compare their carbon intensity with their industry group peers around the world.

Based on the carbon intensity of each constituent company, a company’s weight might be adjusted positively or negatively, but it would not screen out a company from the index solely due to its carbon intensity, the exchange said.

NZX chief executive Mark Peterson said many New Zealand companies were already strongly focused on emissions, and welladvanced in disclosing and discussing their approach to sustainability and how they were managing environmental, social, and corporate governance (ESG) risks and opportunities.

‘‘We see these S&P/NZX carbon efficient indices as an incentive for New Zealand issuers that will help accelerate greater transparency,’’ Mr Peterson said.

The new indices were inclusive — meaning all S&P/NZX 50 companies were covered at present — and recognised disclosures of emissions, and comparatively better performance than global peers, would be reflected in weightings, he said.

‘‘There is global consensus around climate change — and, with carbon intensity a key concern, we expect investment products to be quickly created off the back of these indices,’’ Mr Peterson said.

S&P DJI managing director and global head of ESG Indices Reid Steadman said there had been rising demand for benchmarks that took into account companies’ carbon impacts.

‘‘With growing awareness from both institutional and retail investors, companies are increasingly measuring and managing their environmental impacts,’’ Mr Steadman said