Australia’s first fossil fuel free stock exchange index launched

Australia’s first fossil fuel free stock exchange index launched

Australian investors looking to steer clear of fossil fuel companies will now have an easier option, with the launch of a Fossil Free Index, said to be the first of its kind in Australia.

The index, a collaborative effort from Thomson Reuters and Future Super – Australia’s first fossil-fuel free super fund – was launched alongside another first of a kind, the Thomson Reuters/Future Super Australia Sustainable Leaders Index.

The new indices aim to give both institutional and retail investors improved access and investment transparency to ASX-listed companies considered to be fossil-fuel free and ahead of the pack in environmental, social and governance (ESG) practices.

The Australia Sustainable Leaders Index – which charts the 50 leading medium to large sustainable ASX-listed companies – will also be the first index in Australia to incorporate strict negative screening on direct and indirect fossil fuels, as well as traditional ESG scoring.

Both indices are based on the Thomson Reuters Australia Index, a market capitalisation-weighted stock of approximately 300 companies listed on the ASX.

Companies are screened according to a process developed by Future Super, which includes Thomson Reuters ESG services as a primary data source, amongst others.

Simon Sheikh – the managing director of Future Super, which he founded exactly one year ago – says he expects demand for fossil fuel free investment to increase in the next 12 months.

“While a consistent stream of research has been released pointing to the poor recent performance of fossil fuel exposed companies, our fossil fuel free indices will provide potential investors with a day by day analysis of the performance of this investment strategy,” he said in a statement.

Indeed, the rationale for fossil fuel divestment is rapidly shifting from being ethically sound, to economically sound.

Or, as John Quiggin put it in 2014, “the cold hard numbers of putting money into fossil fuels don’t look good.”

This is largely due to the fact that scientists tell us – and major economic and industry groups, including the International Energy Agency, agree – that to avoid dangerous global warming, we need to leave the majority of the world’s untapped fossil fuel resources in the ground. Meanwhile, above the ground, we need stop burning the fossil fuels we have already dug up, starting immediately.


Source: RE-new economy

Date: September 2015

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