Going Green On The Toronto Stock Exchange

Originally published on the ECOreport

As the severity and frequency of extreme weather events keeps increasing, there is a growing realization that climate change brings costs and opportunities. These can be analyzed in financial terms, by measuring the tons of carbon produced, meters of water, and hectares of land use. The British data company Trucost Plc evaluates individual companies’ environmental performances, calculates their annual emissions and, dividing this by annual revenues, gives them a rating. Trucost Plc, S&P Dow Jones Indices and the Toronto Stock Exchange (TSX) have partnered to offer three new subindexes for investors going green on the Toronto Stock Exchange.

Going Green On the Toronto Stock Exchange

Though these new indexes are purely informational, they are a visible proof of the extent that environmental consciousness is penetrating the business community.

“With an increasing number of Canadian investors basing their investment decisions on how companies manage environmental issues, this S&P/TSX index series will provide an important and relevant benchmark within this space,” says Julia Kochetygova, Head of Sustainability Indices at S&P Dow Jones Indices.

The Three Indexes

In a joint press release, the companies offering this evaluation tool said:

The S&P/TSX 60 Carbon Efficient Index is designed to measure the performance of companies in the S&P/TSX 60 while overweighting/underweighting those companies that have lower/higher levels of carbon emissions.

The S&P/TSX 60 Carbon Efficient Select Index is designed to measure the performance of companies in the S&P/TSX 60 while excluding those companies with the largest relative carbon footprint. The Index is optimized so that it closely tracks the returns of the S&P/TSX 60.

The Carbon Footprint for both of the S&P/TSX 60 Carbon Efficient Index and the S&P/TSX Carbon Efficient Select Index is defined as the company’s annual greenhouse gas (GHG) emissions and is calculated by Trucost Plc, a London-based firm that develops and sells products and services that evaluate the environmental performance of companies.

The S&P/TSX 60 Fossil Fuel Free Index is designed to measure the performance of companies in the S&P/TSX 60 that do not own fossil fuel reserves. RobecoSAM, an investment specialist focused exclusively on sustainability investing, conducted the research for ownership of fossil fuel reserves.

Top Photo Credit: Financial District, Toronto, by Neal Jennings via Flickr (CC BY SA, 2.0 License);