S&P unveils net-zero index range
New indices are based on 2021 report from Intergovernmental Panel on Climate Change.
S&P Dow Jones Indices has created a range of climate-focused market benchmarks to support net-zero portfolio alignment.
Called the S&P Net Zero 2050 Carbon Budget Indices, the benchmarks’ design is based on the most recent report from the Intergovernmental Panel on Climate Change (IPCC).
Five benchmarks have been launched, one for each major S&P index. They have been created as a guide for investors to be aware of what equities a net-zero portfolio can include.
Rebalanced annually, these indices will allocate, and adjust, a carbon budget across their constituents based on the year of launch. For the 2022 indices, this means an initial 25% cut in the volume of emissions as well as yearly emission reductions of approximately 10%.
The “maiden” 2022 series include net-zero benchmarks for the S&P 500, S&P Global, S&P Europe, S&P Emerging, and S&P Developed indices.
‘Code red’ for the planet
At each annual rebalance, companies’ most up-to-date carbon emissions data will be used.
The 2021 IPCC report has formed the basis for these indices’ design. The report assessed the state of climate change and progress towards keeping global temperature increases below 1.5°C compared to pre-industrial levels with 83% probability.
These have been created in collaboration with S&P Global Sustainable1, the sustainable intelligence arm of S&P.
“The 2021 IPCC report signalled a ‘code red’ for humanity and the investment community is responding to this alarm call, with over half the world’s assets under management now committed to net zero by 2050,” said Richard Mattison, president of S&P Global Sustainable1.
“It is essential that investors have access to simple, transparent, and scalable tools to support their decision making, and we are proud to be launching this new series of indices to support investors in navigating the transition to a sustainable future.”