EIO launches new Index to cut corporate emissions
- 06 June 2011
LONDON: Environmental Investment Organisation (EIO) has released the Environmental Tracking (ET) Index Series, a low carbon market mechanism which aims to cut global companies’ emissions and spur green investment, as part of the Clean Revolution.
The ET Index is similar to a traditional Socially Responsible Investment index, but works more like a mainstream passive index - such as the UK FTSE 100 - because it includes every single constituent, rather than just focusing on the top performers.
The clear and public environmental scoring will incentivize greater disclosure from the world’s largest companies, which in turn will lower global greenhouse gas emissions.
The scoring is based on the re-weight system, which supports the share prices of the companies with the lowest GHG emissions and transparency levels.
Sam Gill, Operational Director, EIO, explains: "The logic behind the ET re-weight system is that it applies the most pressure to the most carbon intensive industries and the least pressure to the least carbon intensive industries. After-all, the high intensities companies/sectors are the ones that are going to need to have the most pressure applied to them in order to encourage a shift to a low carbon model.”
The launch of ET Index Series follows on from EIO’s ET UK 100 and ET Europe Carbon Rankings, which ranked Europe’s biggest companies by emissions intensity and transparency levels.
EIO's ET Index joins an array of initiatives which call for mainstream low carbon investment practices, including the UN Global Compact, the Carbon Disclosure Project, and The Climate Group’s own Climate Principles.
Emily Farnworth, Global Alliance Director, The Climate Group, said of the EIO’s innovation, "It's extremely helpful to see new products like this emerging. It encourages companies to measure, report and reduce carbon emissions. And, in this particular case, it also provides mainstream investors with a new tool to support the transition towards a low carbon economy."