WELLINGTON, New Zealand, May 2, 2021 /PRNewswire/ — New Zealand’s Exchange (“NZX”) today launched New Zealand’s first carbon efficient indices in partnership with the world’s leading index provider, S&P Dow Jones Indices (“S&P DJI”), amid rapidly growing investor interest, and action globally to reduce carbon emissions and address climate change.
New Zealand’s first ‘carbon light’ index
Aligned with best global practice, the two new indices, S&P/NZX 50 Carbon Efficient Index and S&P/NZX 50 Portfolio Carbon Efficient Index, utilise Trucost’s environmental dataset to weigh companies listed on the NZX according to their carbon intensity and sector impact. The key objective behind the indices is to incentivise New Zealand companies to compare their carbon intensity to their industry group peers around the world. Based on the carbon intensity of each constituent company, a company’s weight may be adjusted positively or negatively, however, it will not screen out a company from the index solely due to its carbon intensity.
At launch, the S&P/NZX 50 Carbon Efficient Index and the S&P/NZX 50 Portfolio Carbon Efficient Index will be about 25% and 19% lighter on carbon emissions (carbon-dioxide equivalent: CO2-e) than their parent indices, respectively, while providing similar risk/return characteristics as the parent indices.
Showcase opportunity for Kiwi businesses
NZX Chief Executive, Mark Peterson, says many New Zealand companies are already strongly-focused on emissions, and well-advanced in disclosing and discussing their approach to sustainability and how they are managing 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 says the new indices are inclusive – meaning that currently all S&P/NZX 50 companies are covered – and recognised disclosures of emissions, and comparatively better performance than global peers, will be reflected in weightings.
“An important role for New Zealand’s Exchange is to ensure capital can be invested with confidence into companies that provide opportunities for sustainable growth.”
“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.”
Rising demand for carbon benchmarks accelerates