S&P 500 Launches a Carbon Efficient Index

Even without a global government consensus on climate change action, the business world continues to move ahead.  Recently the S&P 500 launched a ‘Carbon Efficient Index’ to assist investors and fund managers in finding companies that are responding best to climate change.


The S&P Index aims to profile companies doing the most on climate change and uses a metric of total emissions to total company revenues in order to determine the most ‘effiicient’ companies in each sector.  This is a simple and interesting approach; unfortunately, their work focused more on excluding the 100 worst than finding the best.   If 400 of the 500 companies in the S&P 500 are actually carbon inefficient, this index will still only screen out at most 100 of them, leaving the other 300 inefficient companies with a ‘carbon efficient’ label.  Additionally, the desire to maintain a 50% market cap weighting in each sector means that potentially even big inefficient polluters will have to be included. 

At the end of the day, if you’re an investor that is concerned about climate change, it is still better to follow the S&P Carbon Efficient Index than the S&P 500. 

Valuing of externalities continues to grow and putting a cost on climate change (or carbon in particular) is just the first step towards true cost pricing for resources currently outside the economic system like water and ecosystem services.


About derm

I have a job in Scotland, working on business and climate change. With a passion for and graduate schooling in whole-systems sustainability from Sweden, I try to keep my hand on the pulse of the sustainability world through various side-projects with friends and peers. I've written reports on water, on true costing of food and natural resources, responsible investing, and on global organizational networks. I love hill running, probably because I left all the powder skiing back in British Columbia. I also love seeing things grow and looking at something familiar with new eyes. I think I could live happily for a year on pizza and nachos, although I'd prefer to not find out. I believe wild animals have a message for us, and it may be something to do with the fact that they've been getting a bum deal on this planet lately. When I was little I believed that there was someone special out there for each and everyone of us. I still believe that. I know world is a complex place, and feel that open and honest communication is probably one of the few sure ways to lead us to success.
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