A new benchmark has launched to measure the performance of companies enabling the transition to a net zero carbon world.
Clean energy specialist Longspur Research and corporate advisor Radnor Capital Partners have joined forces to launch new venture Lonspur Radnor Indices, which has created the Active Net Zero Clean Energy Index & Universe.
The Active Net Zero Clean Energy Index in UCITS-compliant investable index and benchmark based on the top 50 European listed companies within the Active Net Zero Clean Energy Universe.
Companies that are included in the Active Net Zero Clean Energy Universe are actively helping others in the transition to a net-zero world – not simply pledging to achieve net zero themselves. They are described as “enablers not compliers” by the firms and are delivering clean energy solutions.
They are assessed on their current contribution to net zero transition, not their promised contribution, and fossil fuel activities are penalised. However, fossil fuel companies will be included when their active net zero activities dominates.
Inclusion in Universe is also assessed using the EU Taxonomy for Sustainable Activities and selected activities on the pathways set out by the IPCC in its Special Report on Global Warming of 1.5°C and more recently in the IEA’s Roadmap to Net Zero report.
A company’s activities are quantified and scored to derive an overall Active Net Zero measure – there are currently 137 companies in the Universe.
Groups are then screened for liquidity and market cap thresholds before they are included in the Active Net Zero Clean Energy Index.
Commenting on the launch: Adam Forsyth, head of research at Longspur Capital, said: “We were looking to create a universe and index that was not just reliant on negative screening, and ‘clean’ or ‘green’ labels. We wanted to create a systematic methodology that reflects a company’s active engagement and progress in pursuing a net-zero outcome.”
Iain Daly, director and co-founder at Radnor Capital Partners, added: “This index has been designed with authenticity at its heart. Investors are eager and willing to invest in the companies building a more sustainable future, but the means to do this are not immediately clear. This index identifies those companies helping the world reach net zero, rewarding genuine contribution not vague or unrealistic promises.”
