Brazilian stock exchange revamps portfolio for carbon efficient index

Tweaked portfolio for index that has returned 17% in past 12 months

The Brazilian stock exchange has revamped the composition of the ICO2 carbon efficient index it launched at the end of 2010.

The index – which has returned +17.04% over the past year – is based on the IBrX-50 index and takes into account the companies’ emissions of greenhouse gases (GHG) in its weighting.

Over the same time the IBrX-50 – a total return index based on a theoretical portfolio of the exchange’s 50 most actively traded stocks, has returned +9.23%.

The new theoretical portfolio will run until May 3 and is made up of 36 stocks in 35 companies (full listing below).

The index was launched by the BMF&BOVESPA exchange and development bank BNDES at the United Nations climate talks in Cancun, Mexico in December 2010.

The data is complied by the Center for Sustainability Studies at the Business Administration School of Fundação Getúlio Vargas.

The index requires companies to disclose their greenhouse gas emissions, including so-called scope 1 (direct emissions), scope 2 (emissions from purchased energy) and scope 3 (indirect emissions from business air travel and land logistics).The index aims to be a tool to stimulate listed Brazilian firms to calculate and disclose their emissions.

“By putting together and disclosing their carbon inventories, being transparent with regards to their GHG emissions, companies send a message to the market that they are contributing to sustainable development and adopting good governance practices,” BMF&BOVESPA and BNDES said at the time.

An exchange traded fund based on the index, BlackRock’s iShares Carbon Efficient Index Brasil Index Fund, now has BRL333.3m (€125m) in assets.

Last month the São Paulo-based exchange said that 58% of listed companies now adhere to a ‘report or explain’ approach to sustainability. Exchange announcement

Index components:

ALL, Ambev, BM&FBOVESPA, BR Malls, Bradesco, Bradespar, Banco do Brasil, Braskem, BRF Foods, CCR, Cemig, Cielo, Cosan, Electropaulo, Fibria, GOL, Itausa, Itau unibanco, JBS, Klabin, Lojas Americanas, Lojas Renner, Marfrig, MMX, MRV, Natura, OGX Petroleo, OI, PDG Realty, Santander BR, Souza Cruz, Suzano Papel, Telefonica, Tim e Vale.