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Clean energy specialist Longspur Capital partnered with corporate adviser Radnor Capital Partners to develop a clean energy index. The aim of the index is to set up a database of companies that are leading the way in energy transition. This will further help identify companies that are making greenwashing claims.
London-based companies Longspur Capital and Radnor Capital Partners launched a new venture Lonspur Radnor Indices. Through this, the duo developed the Active Net Zero Clean Energy Index.
What is the index for?
The Active Net Zero Clean Energy Index will analyze companies based on their “actual performance” with respect to achieving a net-zero world. This means that instead of the companies ‘promised targets’, their active and current contribution will be taken into account.
The eligibility criteria will be defined according to the E.U. Taxonomy for sustainable investments and activities which are listed in the IPCC’s Special Report on Global Warming of 1.5°C. In addition, the criteria will look at the IEA’s Roadmap to Net Zero report for further assessment.
Using a methodology called Active Net Zero, the companies aim to foster a systematic and transparent framework that can be repeated multiple times.
Enablers not compliers
The index represents the top 50 European clean energy and related companies that meet the strict criteria that have been set according to market capitalization and liquidity. Companies that are included in this index are just not committing to reach net-zero themselves. According to the duo, they are termed as “enablers not compliers” and are executing clean energy solutions.
On launching the index, head of research at Longspur Capital, Adam Forsyth 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.”
At the moment, fossil fuel companies and activities are penalized. However, if these companies have active net-zero activities which are making significant progress, they could be included.
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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 outcomeAdam Forsyth, head of research at Longspur Capital
Identify greenwashing claims
At the same time, this new index will help identify those companies that have committed to decarbonization but either have failed to act on them or haven’t made any progress with the same. The developers of the index claim that this will be highly useful as several of these companies are named in mainstream ‘clean’ energy indices.
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 promisesIain Daly, director and co-founder at Radnor Capital Partners
Director and co-founder at Radnor Capital Partners, Iain Daly, said: “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.”
Read: None Of The G7’s Leading Stock Indexes Are Aligned With Paris Climate Goals, Says New Research
Lead image courtesy of Nuno Marques/Unsplash.