Overview

ESG Indices launched by Standard & Poor's and SAM (Sustainable Asset Management) have demonstrated that funds taking ESG factors into account can achieve positive alpha. A growing number of index companies are launching indices that take into account the environmental and social performance of companies.

Creating an environmental index involves the following: establish criteria for selecting companies, assessing their environmental performance of the companies and creating a formula that takes this performance into account in the relative weightings.

CO2Benchmark's database is uniquely suited for creating such indices given that it contains the most accurate and up-to-date environmental disclosures of ~3,000 companies. We have also applied our expertise in benchmarking to provide you with the best sector benchmarks (averages, quartiles,...) so that you can compare any company to its true peers.

Our carbon ratings for example are ideally suited for indices that focus on carbon emissions given that they take into account:

• Carbon efficiencies of companies relative to their peers
• Disclosure levels
• Year-over-year % variations of carbon efficiencies

An index that uses our ratings will incentivize companies to disclose and achieve hard results in terms of carbon efficiencies.

How can you source our data?

The process for sourcing data from us is simple: clients such as the EIO (www.eio.org.uk) provided us with:

• A list of ISIN's (1,100 in the case of EIO)
• Required performance metrics (GHG Scopes, Energy consumption, EU ETS, Waste, External verification)
• Methodology to tackle the non-disclosing companies part of the index (e.g. take by default the 4th quartile performance of the sector to which a non disclosing company belongs)

We then return the metrics in an XLS file and clients can than compute the final weights for each company using their own algorithms.

Clients can request a full audit trail showing where the data is coming from, thereby being able to rely on hard facts & figures for any inquiry regarding their index.

Contact us today at +44 207 127 5134 to explore how we can help you create unique environmental indices.