SGX and OCBC launch low carbon index

BOURSE operator Singapore Exchange (SGX) S68 and OCBC O39 : O39 0% announced that they have jointly launched an index that tracks 50 Singapore or globally-listed companies based on their carbon intensity performance.

In a bourse filing on Monday (Mar 14), the iEdge-OCBC Singapore Low Carbon Select 50 Capped Index will track the top 50 companies by free-float market capitalisation that are representative of Singapore's real and financial economy.

The index was developed by SGX as part of its Sustainability Indices product suite together with product specialists from OCBC. It uses an exclusionary methodology to remove companies that have a heavy involvement in the fossil fuels sector, while upholding best-in-class selections based on their Scope 1 and Scope 2 greenhouse-gas emissions per unit of revenue.

Scope 1 emissions refer to direct emissions from sources that a company owns or controls, while Scope 2 emissions refer to indirect emissions from the generation of energy that a company has purchased.

The resulting top 50 companies by market capitalisation will constitute the index with a capped weighting. Environmental and carbon intensity data are sourced from Sustainalytics, an investment research firm specialising in environmental, social and governance factors.

SGX and OCBC noted that the impact of portfolio decarbonisation in the index is measured through its Weighted Average Carbon Intensity (WACI) and that historically, the index has achieved an average of 50 per cent reduction in WACI when compared to a standard cap-weighted index.

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SGX managing director and head of data, connectivity and indices Ng Kin Yee noted that SGX has seen interest in its sustainability indices grow since its Sustainability Indices suite was launched in 2016.

"The global green awakening has seen investors paying close attention to the actual carbon profile of companies, over and above green targets," he said.

Similarly, OCBC head of global consumer financial services Sunny Quek said that the bank hopes that its efforts will resonate with the wider community and create a "green ripple effect" among other financial players and industry leaders.

SGX traded down 0.7 per cent or S$0.07 at S$9.47, while OCBC traded down 0.3 per cent or S$0.03 at S$11.69 as at 1.03 pm on Monday.

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