FTSE Russell, the global index provider, today announces its new FTSE All-World ex Coal Index Series. The suite of benchmarks will omit companies that have certain exposure to coal or general mining companies with proved and probable coal reserves.
The new index series will assist market participants in managing their portfolio exposure linked to fossil fuels.
The methodology behind the indexes is based on the exclusion of companies whose principal business activity is either Coal Mining or General Mining as identified by the Industry Classification Benchmark (ICB).
In addition, revenues must arise from various forms of Coal Mining as stated by the Standard Industrial Classification (SIC) System or based on the company’s most recent published Annual Report and Accounts.
This exclusion methodology is designed to be transparent, easy to understand, quantifiable and repeatable across FTSE’s Global Equity Index Series (FTSE GEIS), which covers approximately 7,400 companies that represent almost 98% of global market capitalisation.
FTSE Russell is also developing custom ex coal solutions in line with impending legislation in Norway and California in the United States. These new indexes follow on from last year’s launch of the FTSE All-World ex Fossil Fuels Index Series, an innovative set of benchmarks that omit companies linked to exploration, ownership or extraction of fossil fuels.
Kevin Bourne, Managing Director, Database Services, FTSE Russell, said: “This winter, senior politicians and businessmen will attend the 2015 UN Climate Change Conference in Paris to discuss what is widely seen as one of the most important investment issues of our generation.
“As a leading global index provider, FTSE Russell recognises the significance of this debate, and has been at the forefront of developing benchmarks to assist market participants to manage their fossil fuel exposure.
“We will continue to innovate across the sector and support our customers’ requirements as they increasingly seek to define, measure and model the industrial transition to a Low Carbon or ‘Green’ Economy.”
This latest announcement from FTSE Russell further extends London Stock Exchange Group’s commitment to offering “green services and products” and comes shortly after the recent launch of a full range of dedicated fixed income segments specifically designed for green bond issuance. The aim of which is to promote greater transparency in the market by providing green bond instruments with a specific position within London Stock Exchange’s standard debt markets helping investors to identify ‘green’ instruments more easily.
The City of Gothenburg launched the first green bond on the segments earlier this month with Shanks Group, the waste-to-product business, also issuing the first retail targeted green bond.