Index provider FTSE Group has launched the FTSE CDP Carbon Strategy index series, which has been developed jointly with the Carbon Disclosure Project and Ends Carbon.
The new index series, which is aimed at ETF and structured products providers, launches initially with two UK indices, the FTSE CDP Carbon Strategy All-Share and the FTSE CDP Carbon Strategy350, which have been designed to measure the potential impact of climate change on investment returns.
The series will be based on future-oriented criteria rather than past emissions data tracking UK benchmarks. The indices also identify high-risk industry sectors where carbon risk has a significant impact on corporate earnings such as aviation, oil and gas, mining and electric power. Companies in these sectors will be subject to tilts that are ten times greater than those in lower-risk industries.
The FTSE Group said that by remaining 'sector neutral' and tilting weights rather than excluding companies, the new indices achieve a low tracking error relative to the FTSE All-Share and FTSE350 indices.