FTSE Group is now helping investors sort out which companies are the safest bets for their carbon emissions policies. The new FTSE index rates coporations, by sector, according to their carbon footprint. The investment advisory group warns that, in the coming carbon reduction era, the cleaner the company, the safer the investment.
FTSE Group is an independent rating company jointly owned by The Financial Times and the London Stock Exchange. It maintains over 120,000 equity, bond and alternative asset class indices. From The Guardian:
The two new indices, the FTSE CDP Carbon Strategy All-Share Index and the FTSE CDP Carbon Strategy 350 Index, have been developed in partnership with the Carbon Disclosure Project (CDP) investor group and analyst firm ENDS Carbon.
The indices work by analysing the carbon strategies and "tilting" their rating based on their exposure to climate change related risks such as proposed carbon pricing mechanisms. As a result investors will be able to quickly assess which firms and sectors are most at risk from climate-related impacts.
For example, companies in carbon-intensive sectors such as aviation, oil and gas, mining, and electric power will be subject to "tilts" that are 10 times greater than firms operating in lower risk industries.
"By applying forward-looking analysis, we see how companies will be impacted by climate change in the future and those demonstrating strong carbon performance will benefit from higher rankings within the indices," explained Paul Simpson, chief operating officer at the CDP.
Bringing individual corporations' carbon emissions performance into the open and enabling major investors to factor that into their long-term decision making could be very helpful in the same sense as American insurance companies validated the reality of global warming by refusing to write hurricane coverage throughout the Gulf states and the entire American Atlantic seaboard.