A low-carbon equity index family has been launched by Solactive AG and the South Pole Group to address regional and global carbon exposures, while offering income generation potential. The investment opportunities are designed to help reduce climate change and assist adaption to it, while also reducing risk in investing in climate change-related businesses.
“We are proud to be the first real provider in the market that can offer investors access to a smart beta low-carbon strategy. Such an investment shows outstanding performance and volatility figures, while at the same time, ensures an environmental friendly approach,” said Steffen Scheuble, CEO, Solactive AG.
The index does not include companies with high greenhouse gas emissions, and those that do not operate with a significant strategy for reducing climate risk. Six indices make up this particular family: Solactive SPG Europe Low Carbon Index, Solactive SPG Europe High Dividend Low Volatility Index, Solactive SPG US Low Carbon Index, Solactive SPG US Low Carbon High Dividend Low Volatility Index, Solactive SPG Eurozone Low Carbon Index, and the Solactive SPG Eurozone High Dividend Low Volatility Carbon Index.
Of the 6 indices, the Solactive SPG Eurozone Low-Carbon High Dividend Low Volatility Index seems to have the highest per annum return: 8.02%.
So, why does low-carbon investing matter? In an article on Nature.com, Nathan Fabian put it in context and described the crux of the situation concisely, “Around $300-trillion worth of assets is managed globally and more than $20 trillion of new investment is forecast to flow into the global economy each year. Private finance has the capacity to fund the wholesale shift to a low-carbon economy that the world needs to keep global warming to within 2 °C, the limit agreed on by national governments. The International Energy Agency estimates that such a transformation could be achieved by a sixfold increase in annual investments in clean energy and energy efficiency, from around $390 billion in 2013 to $2.3 trillion per year by 2035.”
In a sense, one could say that every consumer decision we make is also connected to climate change – particularly when we try to limit our fossil fuel consumption or choose a low-carbon diet, but we can also choose to invest in ways that reduce climate change impacts.
Image Credit: Energy.gov
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