New carbon index to aid investors

A new set of indices has been launched listing some of the largest companies in Europe's efforts to reduce carbon footprint, in a bid to attract more investment into greener firms.

Research group Environmental Investment Organisation (EIO) aims to guide investors who want to back carbon-efficient firms with two separate listings for the UK and Europe.

It hopes that it will prompt companies to step up their efforts to cut carbon emissions, and make their strategies and achievements public.

The ET UK 100 and ET Europe 300 indices work by supporting share prices of companies that perform the best environmentally and are the most transparent.

Under the re-weighting system, the least transparent and most polluting companies suffer penalties that are reflected in their performance on the index.

EIO operational director Sam Gill said: "The EIO is trying to bridge the gap between investment industry pledges on climate change and taking concrete action. The index creates an actual economic incentive for people who want to make money to factor in environmental costs of companies into the share price.

"If we can get these indices supported by significant number of investors, that will put pressure on share price and encourage companies to reduce their carbon footprint. It is a potentially powerful tool."

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