Investments & Climate Change

Low Carbon Indexes

Objective:

The Paris Agreement that will limit global warming to 2 degrees Celsius is now firmly in place. Investors are increasingly aware of the financial costs of climate-related risks, and pioneers are already exploring business opportunities that arise in the transition to a low-carbon economy. Low-carbon indexes are a crucial part of this shift, helping investors achieve their targets. South Pole Group is the leading data providers to the most advanced low-carbon indexes on the market.

Climate-Optimised Investment Strategies

Our team has helped numerous index providers design climate-friendly indexes by providing high quality emissions data. These indexes are being used as benchmarks and for tracking purposes, structured products, factor and smart beta investing, hedging and overlays. The indexes cover all levels of optimisation in terms of climate impact ambitions, tracking errors, as well as other financial parameters.

— In depth

Our offering

STOXX® Low Carbon index family

Together with global index provider STOXX and CDP, we have developed innovative indexes to help investors identify the climate risks in their portfolios. These low-carbon indexes enable investors to shift their exposure away from carbon-intensive assets to low-carbon investments. The STOXX® Low Carbon index family offers a range of innovative solutions for investors with different low-carbon strategies, based on established benchmarks and blue-chip indexes such as the EURO STOXX 50® and STOXX® Europe 600. The STOXX Low Carbon indexes consist of four sub-families offering varying degrees of carbon exposure. Using the indexes, investors can choose to 'tilt' their carbon exposure (i.e. mitigate their carbon risk) to their preferred degree. This can be done by either changing the overall risk-return profile or by only investing in climate leaders.

Solactive SPG Low Carbon Index Family

Solactive offers over 25 low carbon indexes for a wide variety of geographies, including the world's first fixed income low carbon index: The Solactive SPG Euro IG Low Carbon Bond Index. This index serves the needs of risk-sensitive fixed income investors that seek to reduce the carbon footprint of their investment portfolios and mitigate climate-related investment risk.

ERI Scientific Beta Low Carbon Indexes

The new ERI Scientific Beta Low Carbon Multi-Beta Multi-Strategy Index has a strong positive impact on the environment by excluding the largest carbon emitters, i.e., the companies with the highest carbon intensity in each sector of activity and the largest holders of fossil assets. By weighing on the value of the stocks of the excluded firms, the smart beta indexes pressurise the companies in question to change their strategy or their production process in order to avoid exclusion. Institutional investors can reduce the carbon footprint of their equity investments by more than 80% by using smart beta indexes. The smart beta indexes also outperform traditional market indexes by creating more than 50% additional value in the medium term. The ERI Scientific Beta Low Carbon Multi-Beta Multi-Strategy Index is also the first index to include Scope 3 emissions into the selection process.

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