FTSE TPI Climate Transition Index

Investors have grown increasingly more sophisticated when it comes to understanding of the risks and opportunities arising from climate change. So have their approaches to capturing these aspects of climate change in their portfolios. The market has taken evolutionary steps as it has developed from relatively simple risk-based implementation options—such as creating "ex fossil fuel" or "low carbon" portfolios—to approaches that also capture the potential upside from the transition to a low carbon economy,  e.g. via increased exposure to the global green economy.

Up to now, the missing piece has been a robust, data driven approach to capturing the forward-looking aspects of corporate efforts to adjust their businesses for the climate transition.

The FTSE TPI Climate Transition Index Series combines FTSE Russell’s expertise in climate data and sustainable investment index design with the Transition Pathway Initiative’s (TPI) analysis of how the world’s largest and most carbon exposed / intensive public companies are managing the climate transition.

As global investors continue to move towards actively transitioning their portfolios, the series is now expanded to provide a range of solutions that captures the risks and opportunities arising from the climate transition while also adjusting exposure to companies based on their TCFD-aligned climate governance and commitments to “2DC/Below 2DC pathways". This is achieved by adjusting company weights based on five criteria (see opposite image).