FTSE TPI Climate Transition Index

The next generation of climate indexes

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.

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TPI five criteria

The FTSE Developed ex-Korea TPI Climate Transition Index (“FTSE TPI Climate Transition Index”) 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.

The result is an index series 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:

TPI Index overview 

Church of England Pensions Board adopts FTSE TPI Climate Transition Index

About the TPI

The TPI is a global initiative led by asset owners and supported by asset managers. Aimed at investors and free to use, it assesses companies’ preparedness for the transition to a low-carbon economy, supporting efforts to address climate change. Launched in 2017, it is rapidly becoming the "go-to" corporate climate action benchmark.

Using publicly disclosed company information sourced and provided by TPI’s data partner, FTSE Russell, it:

  • Evaluates and tracks the quality of companies’ management of their greenhouse gas emissions and of risks and opportunities related to the low-carbon transition;
  • Evaluates how companies’ planned or expected future carbon performance compares to international targets and national pledges made as part of the Paris Agreement;
  • Publishes online the results of this analysis through a publicly-available tool hosted by its academic partner, the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science.

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