BSE-GREENEX

Background

Climate change is considered to be one of the greatest and widest ranging market failures as modern day efficient markets have largely failed to price in the large number of negative externalities associated with it. Businesses the world over have begun to acknowledge the phenomenon and the response to climate change and the systemic and sector specific risks associated with it need to be urgently countered through the realization of viable market based mechanisms. This imperative is especially strong in the developing country context. Owing to the high levels of risks posed to countries like India, the immediate need to shift to a low carbon growth path is clear. In turn, low carbon strategies can only be implemented if the emissions landscape across businesses and its effects on sustainable growth are clearly defined and understood. The BSE-GREENEX Index is a veritable first step in creating a credible market based response mechanism in India, whereby both businesses and investors can rely upon purely quantitative and objective performance based signals, to assess “carbon performance”.

Brief introduction of gTrade

gTrade Carbon Ex Ratings Services Private Limited (gTrade) is a company based out of India, which has co-developed the BSE-GREENEX Index in close association with the BSE. The mission of the company is to create viable market based solutions for industries, investors and governments, to promote energy efficient practices and encourage impact investing in economically and environmentally sustainable businesses. It seeks to achieve its mission by developing and promoting a “green ethos” in high growth developing nations through market based push and pull factors by providing financial tools to investors - in the form of innovative products that are developed with keen insight and cutting edge technology, in order to create internal capacities and capabilities within the corporate sector to entrench sustainable practices. For more information, please visit:

Index Description(Fact Sheet)

The BSE-GREENEX Index includes the top 20 companies which are good in terms of Carbon Emissions, Free-Float Market Capitalization and Turnover. The Index is a Cap Weighted Free-Float Market Capitalization weighted Index comprising from the list of BSE-100 Index. The Index has been back-tested from 1st October, 2008 (Base Date) with the base index value of 1000. The Index is rebalanced on a bi-annual basis i.e. end of March and September quarters. The September quarter review will be based on the fresh set of carbon emission numbers and the March quarter review will be based on the existing carbon emission numbers but latest financial data.

Index Specification

BaseDate / 1st October, 2008
Base Index Value / 1000
Date of Launch
Method of calculation / Cap Weighted free-float market capitalization.
Number of scrips / 20
Capping / Stock level Capping at 6%
Index Constituents / Click here for list of constituents
Index calculation frequency / Real Time
Index calculation and Maintenance / Click here for Index Calculation and Maintenance
Index Reach / Click here for stock-wise, sector wise market capitalization, weightage etc.
Market Capitalization and Turnover Coverage / Click here for market capitalization and turnover coverage
Historical Values of Index / Index, Price Earnings, Price to Book Value ratio and Dividend Yield %
Historical Replacements / Click here for history of replacements
Historical Notices / Click to search Historical Notices on Index Replacements

BSE-GREENEX -Stock Selection Criteria

  1. Eligible Universe: Companies forming part of BSE-100 Index
  2. GHG Emission numbers are provided by GTrade Carbon Ex Rating Services Pvt. Ltd. for the eligible universe.
  3. Scale the GHG Emission numbers (C), Average Free Float Market Capitalization (M) & Average Turnover (T), from 0 to 100 within the sector
  4. Assign points to the above mentioned parameters from 1 -50 within the sector
  • For C: For 0-2, assign 1; For 2-4, assign 2; and so on
  • For M & T : For 0-2, assign 50; For 2-4, assign 49; and so on
  1. The composite point for a company is arrived by taking the summation of the points multiplied by their respective weights, where C is weighted 50%, M is weighted 40% and T is weighted 10%
  2. Rank the companies on the basis of composite point
  3. For base composition - top 20 companies selected
  4. Review frequency: Bi-Annual (March & September)
  5. On-going review:
  • Mandatory Exclusions: If the existing constituent ranks beyond 28 (i.e. 29, 30….) by final rank the company will be excluded
  • Mandatory Inclusions: If a non constituent ranks within 12 (i.e. 1 to 11) than the company will be included.
  1. Capping individual stock at 6%. Capping is done at each rebalancing or inclusion/exclusion from the index between two rebalancing.
  2. In case BSE doesn’t have C for a company at the time of September review, the company will be excluded from the universe
  3. In case a company is excluded from BSE-100, the same will also be excluded from this Index

Note:

  • If an index constituent is traded under the ‘Ex-Entitlement’ basis it will be excluded from all BSE Indices. This is done because during this period BSE is unable to ascertain the valuation of the constituent and valuation of a constituent is required for Index calculation.
  • Upon re-listing from suspension or from ex-entitlement, the company becomes part of the regular stock universe that can be considered for inclusion in the Index upon subsequent review.

For more information on BSE-GREENEX contact us:

BSE Ltd.
Index Team
Ground Floor, P.J.Towers,
Dalal Street, Fort,
Mumbai 400 001.
India
Phone No.: +91-22-2272 8176 / 8818
Email: