Aim to Redirect $1 Billion into Carbon-efficient Companies
Submitted by International Finance Corporation
IFC, a member of the World Bank Group, and Standard & Poor's are launching the world's first carbon efficient index for emerging markets that should mobilize more than $1 billion for carbon-efficient companies over the next three years.
The innovative S&P/IFC Carbon Efficient Index will encourage carbon-based competition among emerging-market companies, give carbon-efficient companies access to long-term investors, and should lead to important reductions in carbon emissions in developing countries.
Rachel Kyte, IFC Vice President for Business Advisory Services, said, "With growing pressure on investors to diversify and maintain returns by increasing exposure to emerging markets, and with more and more investors keen to demonstrate a preference for sustainability, including carbon efficient companies, IFC hopes that the launch of this index will help ensure that carbon efficiency is rewarded in the market and that best-in-class companies gain better access to capital."
The index was developed by S&P using carbon data provided by Trucost. It will allow investors to closely track the performance of the S&P/IFC Investable Emerging Markets Index, a leading emerging-market benchmark. Investors will gain exposure to emerging markets and benefit from local rates-of-return while reducing the carbon footprint of their portfolios by 24 percent.
"Investors increasingly view emerging markets as essential to a well-designed global equity portfolio, said David Blitzer, Chairman of Standard & Poor's Index Committee. "With the growing understanding of the role of carbon emissions in climate change, the S&P/IFC Carbon Efficient Index will be a powerful tool for investors seeking to reduce their carbon exposure in a broad portfolio covering emerging markets."
The initiative is the result of a pioneering collaboration that draws upon S&P’s experience in index construction, Trucost's expertise in analyzing and estimating carbon emissions, and the Carbon Disclosure Project's leading engagement initiative to encourage public disclosure of carbon emissions.
IFC provided financial support to the S&P/Trucost consortium to accelerate the carbon research on emerging-market companies. It also provided technical support to help validate and refine the methodology, and it is supporting the Carbon Disclosure Project's efforts to increase their emerging-market coverage by over 500 companies. The initiative also was supported by the United Kingdom’s Department for International Development and the Global Environment Facility.
IFC is the only international financial institution focused exclusively on the private sector, the engine of sustainable development in emerging markets. Along with IBRD, it is currently seeking a capital increase to strengthen its ability to create opportunity for the poor in developing countries-including by supporting low-carbon growth in those countries.
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $14.5 billion in fiscal 2009, helping channel capital into developing countries during the financial crisis. For more information, visit www.ifc.org.
For more information about Standard & Poor’s visit, www.standardandpoors.com.
For more information about the Carbon Disclosure Project, visit www.CDproject.net.
For more information about Trucost, visit www.Trucost.com.
The International Finance Corporation, the private sector arm of the World Bank Group, is the largest multilateral provider of financing for private enterprise in developing countries. IFC finances private sector investments, mobilizes capital in international financial markets, facilitates trade, helps clients improve social and environmental sustainability, and provides technical assistance and advice to businesses and governments. From its founding in 1956 through FY06, IFC has committed more than $56 billion of its own funds for private sector investments in the developing world and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. With the support of funding from donors, it has also provided more than $1 billion in technical assistance and advisory services.
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