S&P Dow Jones Indices has launched what it says is the world’s first broad-based climate commodities index with environmental metrics.
The S&P GSCI Climate Aware Index is aimed at providing market participants with ongoing exposure to the global commodities sector, in line with the main S&P GSCI benchmark but with a lower carbon footprint.
The main index is broad-based and production-weighted to track the global commodities market.
The offshoot index reallocates weighting from higher-intensity fossil fuels into commodities that are crucial to global energy transition through the application of environmental factors in a rule-based methodology, S&P says in a statement on February 28.
According to the index provider, the benchmark aims for a 25% reduction in environmental impact per dollar invested compared to the S&P GSCI and a 5% year-on-year decarbonisation target. It seeks to do this while maintaining total food production and ensuring that land and water environmental impacts are no higher than the parent index.
“The S&P GSCI Climate Aware Index addresses the goals of our customers and market participants who continue to seek broad-based commodities market exposures to manage inflationary risks and for diversification purposes, while improving their environmental footprints,” Fiona Boal, head of commodities and real assets at S&P, says in the statement.
