FTSE TPI Climate Transition Index Series

The FTSE TPI Climate Transition Index Series is designed to reflect the performance of a global and diversified basket of securities, where constituent weights vary to account for risks and opportunities associated with the transition to a low carbon economy. Constituent weights are based on five key climate considerations: company exposure to green revenues, fossil fuel reserves and carbon emissions; as well as companies' climate governance activities (aligned with the Taskforce on Climate-related Financial Disclosures’ recommendations) and forward-looking commitments to carbon emission pathways (aligned to the Paris Agreement and 2DC/below 2DC warming scenarios). The indexes combine data and analysis from FTSE Russell and the Transition Pathway Initiative (TPI).

The index series design incorporates five key climate data inputs from the TPI core assessments and FTSE Russell's climate framework:

  • Fossil fuel reserves: Underweight companies with fossil fuel reserves
  • Carbon emissions: Over/underweight companies according to their greenhouse gas emissions whilst applying sector neutrality
  • Green revenues: Overweight companies generating revenues from the global green economy
  • Management quality: Over/underweight companies based on the extent to which they are managing the risks and opportunities related to the low-carbon transition and how they are addressing key aspects of the Taskforce on Climate-related Financial Disclosures (TCFD)
  • Carbon performance: Over/underweight companies according to the extent to which they are committed to carbon emissions pathways that are aligned with 2DC/below 2DC warming scenarios

The Transition Pathway Initiative (TPI) is a global initiative led by asset owners and supported by asset managers, aimed at investors to help assess companies’ preparedness for the transition to a low-carbon economy, supporting efforts to address climate change. FTSE Russell has been the data provider for the TPI since 2017.

Index rules should be read in conjunction with supportingFTSE Russell noticesThese notices advise of advance changes in index methodology, which may not be reflected in index rules until the change effective date. The notices may also communicate revisions in index treatment in the period up to a rule change.