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FTSE Group has developed indices which will omit companes linked to ownership and/or extraction of carbon based fossil fuel reserves.
It claims that the move is ground-breaking and will pave the way to implementation of a total exclusion model for fossil fuel-linked stocks, so that excluded enterprises are removed entirely from the Index Series.
BlackRock, the world’s largest fund manager, intends to launch a solution that tracks FTSE’s new benchmark utilizing seed capital from Natural Resources Defense Council (NRDC), a not-for profit organization with 1.4 million members that works to protect the world’s natural resources, public health and environment. The Index Series has been designed with the close co-operation of BlackRock and NRDC.
The methodology behind the Index Series is based around three key exclusion criteria, is designed to be transparent, easy to understand, quantifiable and repeatable across FTSE’s Global Equity Index Series (GEIS) which covers approximately 7,400 companies that represent almost 98% of global market capitalization.
Frances Beinecke, president of the Natural Resources Defense Council, commented: “This initiative is about creating the kind of world we want to leave for the next generation. We want to move toward a world that no longer relies on dirty energy that threatens our future, damages our communities and destabilizes our climate. A fossil fuel-free future is where we see opportunity and promise, and that’s where NRDC wants to direct our financial resources.”
Picture credit: © Roger Pilkington | Dreamstime Stock Photos
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