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 is expected to mobilize more than $1 billion for carbon-efficient companies over the next three years.
"The 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," the organizations said in release.
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%.
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."
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 so-called "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’s new investments totaled $14.5 billion in fiscal 2009, helping channel capital into developing countries during the financial crisis.
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