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