New MSCI green economy indexes to track low carbon investments

MSCI, the US-based provider of investment management tools, has launched a series of new low carbon indices that will set a benchmark of performance for companies looking to support the transition to green economy.

The company expanded its portfolio of environmental indices that will support companies with lower carbon emissions and fossil fuel use than the wider market.

MSCI have launched a range of new indices on a series of environmental, social, and governance benchmarks for investors in the past few years, including the Green Bond Index.

The new Global Low Carbon Leaders Indexes were developed following a request from investment firms Fourth Swedish National Pension Fund AP4, Fonds de Réserve pour les Retraites (FRR) and Amundi.

The three firms said they needed a benchmark to assess the performance of investments in businesses that are working on the transition to a low carbon economy.

MSCI said in a statement: "The MSCI Global Low Carbon Leaders Indexes are the first in the industry to address two dimensions of carbon exposure - carbon emissions and fossil fuel reserves - providing clients with an effective tool for limiting the exposure of their portfolios to carbon risk. While selecting companies with a lower carbon exposure, the indexes aim to maintain a wide and consistent market exposure by minimising the tracking error compared to the performance of the parent standard indexes."

The indices are the first in the industry to enable investors to limit their exposure to carbon risk through carbon emissions and fossil fuel reserves.