FTSE Russell has launched a low-carbon index, which reduces exposure to companies associated with fossil fuels.
The index provider has launched the FTSE Divest-Invest Developed 200 Index, which will cover the largest 200 companies in the FTSE Developed All-Cap Index, but exclude some sectors.
The index will screen out oil and gas producers, oil equipment services and distribution providers and coal and general mining companies.
The index will then allocate to “green” companies, working in the low carbon economy. These firms are determined by the percentage of revenues they gain from green activities.
Examples of these companies include Waste Management, Tesla Motors and Vestas Wind Systems.
BNP Paribas has licensed the index to use it for future swaps and structured products.
“We’ve seen a rapid expansion of the green businesses of many companies around the world. What’s been missing from measures of the ‘green transition’ is exposure to this growth side of the opportunity,” says Kevin Bourne, managing director of database services at FTSE Russell.