and transparent tools to facilitate the implementation of sustainable investment strategies.
Reliable and independent data as the basis for sustainable indices Reliable and certified data are the basis for any low carbon strategy. Yet, many investors do not have the time and expertise to analyze the carbon emissions of every company or do not have access to all necessary data. Therefore more than 800 investors, who account for more than one third of assets worldwide, rely on the data of CDP – the former Carbon Disclosure Project – a leading international non-governmental organization. CDP manages the world’ s largest database of its kind with information on more than 2,000 listed companies. Its data helps investors to analyze the environmental risks and financial opportunities across their portfolios.
STOXX partnered with CDP to use their dataset of corporate environmental information as a highquality source to calculate the STOXX Low Carbon index family that was introduced earlier this year. The index family provides various strategies from reweighting broad benchmark and blue chip indices such as EURO STOXX 50 and STOXX Europe 600 by overweighting low-emitters and tilting away from high-emitters, all the way to options to divest from high carbon emitting companies. They are efficient
Climate change risks and opportunities hidden in supply chains According to CDP, the companies’ own emissions often account for just 15 to 25 per cent of the total emissions across their supply chain, a fact not considered in the majority of cases. There is a small group of companies that besides implementing programs to reduce their own emissions, also employ strategies to reduce emission of their whole supply chain. These companies are rewarded with a place on CDP’ s A list, based on their emissions reduction actions and results. This group is recognized as being the most transparent and fact based. The selection criteria are strict: Just 113 companies worldwide were included in the 2015 A list. Investors can invest in this holistic approach with the help of the STOXX Global Climate Change Leaders Index. Hence, they can support the forward-looking, effective strategies and significantly reduce climate risks in their portfolio straightaway. The index has reduced carbon emissions by nearly 80 per cent with annualized returns of more than nine per cent over the past three years. The UN Climate Summit has underlined the importance of minimizing global carbon emissions in the future. Many governments and companies are aware of their responsibilities and investors can support their efforts. Passive investing is a crucial part of being prepared for future investment requirements. Low carbon index strategies do not only cater to a social responsible investment approach, but have shown to perform similar or even better than their traditional counterparts. ■
Some investors may want to get the most out of the leading sustainable companies only, while others would consider companies and their whole supply chain additionally.
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