Index provider S&P Dow Jones Indices (S&P DJI) and the Korea Exchange (KRX) announced the launch of the S&P/KRX Carbon Efficient Capped Index. The new index is designed to measure the performance of companies in the S&P Korea BMI, while applying inclusion and weighting criteria based on companies’ carbon emissions and greenhouse gas (GHG) disclosure practices.
According to S&P DJI and KRX, the newly launched index aims to reflect the South Korean Government’s move to a low-carbon economy through its Green New Deal initiative. In October 2020, South Korean President Moon Jae-in introduced the new climate goals for the country, including a target to reach carbon neutrality by 2050. South Korea is one of the top ten carbon emitters in the world, responsible for over 1.8% of global emissions in 2017. Over 40% of the country’s electricity is sourced from coal.
Woo-kyeong Hwang, Index Business Head of Korea Exchange said:
“It is a great privilege to launch the S&P/KRX Carbon Efficient Capped Index jointly with S&P Dow Jones Indices, a leading index provider in the world. As the very first carbon efficient index in Korea, the index will be a big boost in global efforts to achieve carbon neutrality while helping businesses to respond to climate change.”
The S&P/KRX Carbon Efficient Capped Index excludes companies that are high carbon emitters or with insufficient GHG emission disclosures, while overweighting or underweighting companies that have lower or higher levels of GHG emissions per unit of revenue, respectively. By employing this unique reweighting methodology, the index is designed to promote behavioral change, and to and recognize companies for greater corporate transparency and optimized carbon-to-revenue footprints.
Reid Steadman, Global Head of ESG Indices at S&P Dow Jones Indices said:
“We are honored to launch the S&P/KRX Carbon Efficient Capped Index with the Korea Exchange and support the growth of green investments in the country. Our carbon efficient and ESG indices are designed to reflect the transition to more sustainable and low carbon economies globally. The index’s unique characteristics help encourage more transparency in ESG data and carbon footprints among Korean companies.”