UBS launches low-carbon tracker index for investment analysis

London, 13 March: UBS has launched an index that aims to track stock market returns with a reduced carbon footprint.
The UBS Europe Carbon Optimized Index provides investors with returns matching the underlying DJ STOXX 600 index, but with around 37% lower carbon emissions, according to back testing of the Swiss bank’s index.
The index does not exclude high carbon sectors, such as oil and gas, but instead over-weights companies that produce less carbon than their peers and under-weights those that are carbon inefficient.
Julie Hudson, head of socially responsible investment research at UBS, said: “In an environment where governments are increasingly taxing and regulating greenhouse gas (GHG) emissions, which has a real financial impact on businesses, there is a growing investor appetite for products that can capitalise on carbon efficiency. In general, firms having a low carbon footprint compared with that of their peers are expected to have a financial advantage, all being equal.”
The index uses data from Trucost, a London-based firm specialising in environmental investment analysis, that measures the GHG emissions and other environmental impacts of companies from the world’s major investable indexes.
UBS has other indexes and products in the environmental sector. In 2006, it launched the UBS World Emissions Index that tracks the performance of carbon exchanges – which at the start of this year included the European Climate Exchange and Nord Pool. It also launched tradable certificates based on this index, in US dollar and Swiss franc denominations.