Index provider S&P Dow Jones Indices (S&P DJI) and Bank of China Hong Kong (BOCHK) announced today the launch of the first climate transition index covering companies in the China Hong Kong Greater Bay Area (GBA).
The new S&P BOCHK China Hong Kong Greater Bay Area Net Zero 2050 Climate Transition Index is designed to measure the performance of companies in the bay area, while achieving a variety of decarbonization targets. According to S&P DJI, the index can also be used for investment tools aimed at reorienting capital towards businesses with improved emissions performance.
Reid Steadman, Global Head of ESG and Innovation at S&P Dow Jones Indices, said,
“The Index reflects how companies in the GBA can be aligned with a 2050 net-zero trajectory and with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures. The Index can serve as a valuable tool for domestic and global investors who are seeking enhanced transparency and opportunities related to climate transition in the region.”
The index measures the performance of eligible equity securities from the underlying S&P China-Hong Kong Greater Bay Area Index selected and weighted to be compatible with a 1.5ºC global warming climate scenario. The index is designed to meet the minimum standards for EU Climate Transition Benchmarks (CTB) Regulation to achieve the goals of the Paris Agreement and help mitigate the risk of greenwashing.
CTB criteria include 7% annual decarbonization, and a 30% minimum reduction in GHG emissions intensity relative to the market index.
The new index also applies ESG screening criteria, based on companies’ involvement in business activities such as controversial weapons and tobacco, alignment with the principles of the United Nations Global Compact, and involvement in relevant ESG controversies.
Sun Yu, Vice Chairman and Chief Executive of BOCHK, said:
“Through our collaboration with S&P DJI, we aim to further expand capital market’s role in advancing the region’s low-carbon transition, supporting the national dual-carbon goals and Hong Kong’s Climate Action Plan 2050, while also promoting the development of Hong Kong as a leading sustainable finance hub and building a greener and more sustainable future for the GBA.”