Posted inESG

S&P offers carbon emissions index

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Traders and investors have another tool to help capture opportunities in the global carbon market after the S&P Dow Jones Indices (S&P DJI) unveiled an index.

The S&P GSCI Carbon Emission Allowances (EUA) EUR index is designed to reflect the performance of European Union Allowance (EUA) futures.

EU Allowances (EUA) are carbon credits, which are used in the EU Emissions Trading Scheme (EU ETS) to reduce greenhouse gas emissions by companies.

The index represents a single-commodity index of the S&P GSCI index series for carbon emissions and is designed to help investors to capture opportunities in this market, S&P DJI said.

The S&P GSCI index measures commodity market performance. It is calculated primarily on a world production-weighted basis and comprises the principal physical commodities of active and liquid futures markets.

Broadening tools

Fiona Boal, head of commodities and real assets at S&P DJI, said that one goal of the index is to broaden “the financial instruments available to traders and investors in the global carbon market”.

“Investors utilise this market to express a specific view on the price of carbon, to hedge risks or offset more carbon-heavy investments in their portfolios, or combine carbon emissions with other assets to create energy-transition or low-carbon strategies while promoting the transition to a lower carbon economy,” Boal explained.

UK-based information provider IHS Markit launched a carbon market index product last September.

Elena Johansson

Senior Reporter

Part of the Mark Allen Group.