Building Low-Carbon Indices Using Carbon Impact Analytics Indicators

Carbone 4, a consulting firm recognized for its expertise in energy and climate issues, has been expanding its consulting services to the financial sector since 2010. The methodology Carbon Impact Analytics – co-developed with Mirova, a subsidiary of Natixis specializing in responsible investing – enables investors, asset managers, and all financial institutions to adopt metrics that help reduce certain climate risks while also capitalizing on the opportunities associated with the energy transition in their investments.

Following work carried out in collaboration with Euronext and the Investment Leaders Group, affiliated with the University of Cambridge, Carbone 4 has published its findings on the development of low-carbon indices in a comprehensive report.

In this report, Carbone 4 explains how Carbon Impact Analytics indicators can be used 1) to reallocate an existing portfolio or index in order to optimize its carbon performance and 2) to develop new low-carbon indices based on the continuously updated Carbon Impact Analytics indicator database.

In fact, the low-carbon indices from Carbon Impact Analytics stand out from other indices on the market for several reasons:

- Calculating indirect emissions (Scope 3) allows for the consideration of transition risk in the broadest sense : This standardized and consistent approach makes it possible to draw an accurate comparison of the index components (including within the same sector);

- Accounting for avoided emissions: to measure not only the risk but, above all, the opportunity associated with a company or an index;

- the creation of custom indices: to better address the specific needs of investors, based on their investment strategy.

Click here to view the full report.

Click here to view the summary of the report in French

Explore the Carbon Impact Analytics Methodology Guide