BSE may launch climate change ETF soon

BSE is in talks with asset managers to launch an exchange-traded fund (ETF), based on its climate change index in the next couple of years, chief executive Ashishkumar Chauhan said on Monday.

BSE launched the S&P Carbonex index in 2012, centred on its popular BSE 100 index, giving increased weighting to companies depending on carbon footprint scores.

"We continue to prod investors and people who specialise in those kind of investments about tracking this index and having an ETF," Chauhan said at the Reuters Global Climate Change Summit.

"The investors who look to invest with a longer-term horizon tend to be a little more into nudging the companies into sustainable activities," Chauhan said. "This is not only a do-good kind of activity, but also a commercially prudent framework for investors to look at."

Globally, asset managers had put $13.6 trillion into environmental, social and governance (ESG) investing strategies as at the end of last year, according to green investment tracker Global Sustainable Investment Alliance.

Only a fraction of that amount, however, found its way into India, Asia's third-largest economy, and other emerging markets which are widely seen as less stringent on environment protection requirements.

That is expected to change with global investors focusing more closely on companies' environmental track-records and preparedness for climate change to mitigate risk events.

BSE is looking to tap into that demand by also offering derivative products based on its Carbonex index in the next few years, Chauhan said at the summit.

Bombay Stock Exchange - BSE