Asia's oldest bourse, the Bombay Stock Exchange on Wednesday launched it scarbon index – the BSE Greenex – a new index of sustainability stocks that help investors looking for green companies. Green companies, or companies that have the best environmental practices to reduce their carbon footprint, are now increasingly seen as more sustainable in the long run.
Global investments in green energy grew by nearly a third to $211 billion in 2010, the latest year for which figures are available, according to data from the United Nations Environmental Program More than half of those were in developing countries.
Here are pointers on how this could benefit you:
• Greenex has 20 companies from the broader BSE 100 index that meet energy efficiency norms, allowing investors to derive benefit from the related cost savings. The company with the biggest weightage in this index is Tata Steel at 6.7 per cent. ICICI Bank, State Bank of India, HDFC, Sun Pharma and BHEL are the other major constituents of the Index. The exchange says that these companies are good in terms of carbon emissions, free-float market capitalization (non-promoter holding) and daily turnover.
• The index will allow investors to track companies that invest in energy efficient practices. Energy-saving practices allow companies to save money, thus improving profitability as well as having an environmental impact. "There are many socially aware investors willing to pay a premium to invest in green companies in the hope of getting better returns," said Ashishkumar Chauhan, BSE's deputy chief executive officer.
• The Greenex will allow asset managers to create products to help investors put their money in green enterprises.
• The Greenex is targeted at retail, as well as institutional investors such as pension funds looking for investments in companies with strong long-term prospects and develop green financial products.
• Investors can invest in a mutual fund that invests in companies that form this Greenex.
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