This week, FTSE Group ("FTSE") launched a suite of new capital investment tools intended to facilitate "green finance", by giving investors greater visibility on low carbon technology sectors and their performance. These new indices have been designed to be used as a basis for sector based investment products, index tracker funds and a range of structured products.
The new FTSE Environmental Opportunities Index Series ("FTSE EO Indices") will measure the performance of companies globally that have significant involvement in environmental technology and environmental business activities, such as:
- renewable & alternative energy;
- energy efficiency;
- water technology; and
- waste & pollution control.
Forming part of the overall FTSE Environmental Markets Index Series, the FTSE EO Indices require companies to have at least 20% of their business derived from environmental markets and technologies.
A key component of the new indices is the identification and classification of 24 industry sub-sectors (ranging from solar power generation equipment, water infrastructure companies, hazardous waste management to power network efficiency), by which companies who provide environmental products, services and activities will be identified and their performance compared. Currently, 130 companies listed on the UK main market and AIM market fall within these classifications.
Will Oulton, FTSE's Responsible Investment Director commented: "The development of a low carbon economy requires clarity about what the investment opportunity is. FTSE's work in this area provides this clarity through the Environmental Markets Classification System, as well as the performance measurement tools, to enable both companies and global investors to track the performance of this fast growing agenda."
The new indices cover the following seven regional markets: UK Index, UK AIM Index, US Index, Japan Index, Europe Index, Asia Pacific Index, Asia Pacific ex Japan.
The launch of the new indices comes just a few days after the publication of "Investment Opportunities for a Low Carbon World" edited by Will Oulton, to which Herbert Smith contributed a chapter. For further information, please click here.
Louise Moore, Head of Herbert Smith's Environment and CleanTech practice groups commented: "It is imperative that London takes a lead as the environmental technology sector expands further. There have been significant developments in terms of policy initiatives and law-making in the UK and internationally, but there is still much to do. It is fantastic therefore to see market initiatives such as this further stimulating growth potential."
For further information about the FTSE Environmental Markets Index Series please click here.