China launches first carbon efficient financial index

The Shanghai Stock Exchange and China Securities Index have launched China’s first index of carbon efficient companies. Powered by data from Trucost, the new index aims to identify companies with financial performance that matches or exceeds their peers, but with significantly lower carbon emissions.

The SSE 180 Carbon Efficient Index is designed to help financial institutions gain enhanced financial performance that lower exposure to carbon emissions provides. China’s economic development strategy increasingly emphasizes the need for green and low-carbon growth. As a result, Chinese companies are expected to further improve their environmental performance. The new index supports this transition by channelling capital towards better performing, carbon efficient companies.

To create the carbon efficient index, Trucost assessed the carbon intensity of all companies in the benchmark SEE 180 Index using its Environmental Register database of environmental performance by more than 5,000 stock exchange listed companies and their supply chains worldwide. While the sector weighting in the carbon efficient index is consistent with that of its benchmark index, within each sector preference is given to lower emitters. Some highly carbon-intensive companies were excluded.

Liu Zhong, vice general manager of China Securities Index, said: “In today’s China where green growth is the new norm, green indexes such as the SSE 180 carbon efficient index will provide the market with a great tool for green financial innovation, guiding more capital and more resources towards low carbon and green companies and industries, which will in turn accelerate the green growth economy.”