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March 16, 2009
S&P Adds Carbon Index to Its Family of Environmental Indices
    by Robert Kropp

Index will rely on research provided by Trucost to determine large cap US constituents of the S&P 500 with the lowest carbon footprints.


Index provider Standard & Poor's has added the S&P US Carbon Efficient Index to the global thematic family of indices that cover such green themes as water and forestry.

"Standard & Poor's is the first independent index provider to offer a broad US market index with an environmental focus, reinforcing our position as the premier provider of global thematic focused indices," said David Blitzer, Managing Director and Chairman of the Index Committee at Standard & Poor's Index Services.

The Index will consist of large cap US constituents of the S&P 500 that have a relatively low carbon footprint, which is calculated as a company's annual greenhouse gas emissions assessment expressed as tons of carbon dioxide equivalent, divided by annual revenue. The Index will allow investors to create financial products that seek to gain exposure from an environmentally efficient perspective.

Research for the Index will be provided by Trucost, an environmental research organization working with companies, investors and government agencies to understand the impacts companies have on the environment. Trucost, which maintains the world’s largest record of corporate greenhouse gas emissions, will calculate the carbon intensity of companies in the S&P US Carbon Efficient Index by researching and standardizing publicly disclosed information and engaging directly with companies to verify its calculations on an annual basis.
S&P 500 companies will be ranked by their carbon footprints on a quarterly basis, at which point the 100 companies with the highest carbon footprints will be removed from the Carbon Index. Companies that have not yet been assigned a carbon footprint by Trucost will be excluded as well.

According to Standard & Poor's, through 2008 the average annual carbon footprint of the S&P US Carbon Efficient Index was 48% lower than that of the S&P 500.

Deutsche Bank, which contributed to the development of the Carbon Index, plans to launch an exchange traded fund (ETF) that tracks the Index.

 

 
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