S&P Dow Jones Indices, the world’s leading index provider, today announced the launch of the S&P Carbon Price Risk Adjusted Index Series, which will measure the performance of companies in each respective underlying index with a weighting scheme based on estimated company market valuation at risk from predicted 2030 carbon prices.
While last year, CDP reported an eight-fold increase in the number of companies incorporating an internal carbon price into their financial plans since 2013, sending a clear market signal that investors are now demanding this additional transparency, the new S&P DJ indices are the first of their kind in the market to incorporate potential future carbon prices, specifically the portion of future carbon pricing not covered by any current carbon prices. Data on the gap between current and potential future carbon prices is supplied by Trucost’s Corporate Carbon Pricing Tool. See the methodology for the Carbon Price Risk Adjusted Index Series here.
“As the efforts to achieve the commitments of the Paris Agreement and the transition to a low-carbon economy progress, future carbon prices could lead to significant increased costs for companies which have not managed their global emissions,” said Hannah Skeates, Senior Director of ESG and Strategy Indices at S&P Dow Jones Indices. “The S&P Carbon Price Risk Adjusted Index Series was developed to help market participants understand the financial risks embedded among the higher carbon emitters of the current global economy.”
The Index Series include 12 global headline indices:
From TCFD, to shareholder activism, to transparency gaps ...
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The new indices are the latest in a growing arsenal of tools with which forward-thinking investors can arm themselves in the fight against climate change and other business risks. In February, more than 450 investor, company and capital market leaders convened at the Investor Summit on Climate Risk to map out next steps for increased action on climate change. Among them was the launch of The Investor Agenda, a collaboration between a diverse group of investors and seven partner organizations who work with more than 1800 institutional investors that identifies actions that investors can take now in four key focus areas - investment, corporate engagement, investor disclosure and policy advocacy.
The Agenda’s release came as 256 investors with nearly $28 trillion in assets under management signed on to Climate Action 100+. Launched in late 2017, this global initiative aims to engage with the world’s largest corporate greenhouse gas emitters on climate change and is a keystone initiative in The Investor Agenda.