• Victoria Galeano

The Low Carbon Risk ETF

Updated: Jul 23

Low Carbon Indexes and ETFs are capital market instruments designed to enable investors to decarbonize their portfolios, i.e. limit the exposure of their portfolios to climate-related risks, such as stricter regulations and physical damage, while participating in the low-carbon economic growth.

Assignment Name:

Development of a Low Carbon Risk ETF


Client:

A Stock Exchange in Latin America


Challenge:

Climate change is an important challenge that affects companies and investors. Stock Exchanges can play an important role in their fight by mobilizing investment resources towards sustainable companies and creating corporate incentives for them to incorporate ESG factors and effective decarbonization actions in their operations. The largest Stock Exchange of Latin America wanted to develop a capital markets instrument, not only meets the needs of many investors to adopt sustainable investment strategies and decarbonized their portfolios, but also to mobilize resources to support the region in its transition to a low carbon economy.


Solution:

Our specialists created "The Low Carbon Risk Index and ETF", an ETF pegged to a thematic index aimed at measuring and incentivizing the decarbonization of the most intensive industries in the emission of CO2 and GHGs in LAC. Its selection methodology is made up of indicators that capture in detail the decarbonization efforts of companies of such sectors, while measuring the contribution of companies to meeting climate related SDGs challenges.


Our index solution is 100% aligned to the Sustainable Development Goals (SDGs) and international disclosure frameworks and standards that companies must adopt, including: GRI, CDP, Science Based Targets, The Greenhouse Gas Protocol, The Climate Disclosure Standards Board (CDSB), and the Taskforce on Climate-Related Financial Disclosures (TCFDs).




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