Smart beta index provider, Scientific Beta to offer a low carbon option for its flagship multi-smart-factor indices.
The Low Carbon option aimed to filter companies with high carbon intensity, which led to considerably reducing the indirect contribution to climate change of investment (the financed emissions) and which encouraged a transition to a low carbon economy.
It would also help exclude companies that fell short of standards of responsible business conduct and were involved in activities where there was a conflict with global environmental, social and governance (ESG) norms.
“The Low Carbon option is now a very important fiduciary choice for investors,” Scientific Beta's ESG director, Frederic Ducoulombier, said.
Scientific Beta's Low Carbon option was said to have financial risk/reward characteristics that were closely aligned with its standard smart factor indices, i.e. capable of delivering outperformance, through exposure to scientifically-validated risk premia and the reduction of specific, unrewarded risks.
It also the additional benefit of a 50% reduction in weighted average carbon intensity over the last ten years and tangible improvements in other measures of risks related to the transition towards a low carbon economy, the firm said.