Shanghai Stock Exchange launches sustainability development index

The Shanghai Stock Exchange (SSE), the world’s fifth largest exchange by market capitalization, has announced it plans to launch a sustainable index next month.

The SSE Sustainable Development Industry Index, a collaboration with China Securities Index Co. (SSE’s joint venture with the Shenzhen exchange), will go live on August 22, the exchange said.

The new index will cover three themes:

Low carbon economy. Stocks of companies where the majority of revenues derive from clean power generation, energy transfer and storage and the “clean production and consumption and water and waste treatment”.

Cyclic economy. Companies with revenues or production processes which “embody saving resources and high efficiency utilization”.

Education services and publishingThe launch follows the high-level Sustainable Stock Exchanges event in Xiamen, China in September last year that was organised by the United Nations Conference on Trade and Development (UNCTAD), Principles for Responsible Investment (PRI) and Global Compact.

The index will comprise the top 10 stocks in each theme plus 10 others to make a 40-strong index. The index universe is stocks in A shares listed on the exchange.

The constituents will be adjusted annually and implemented on the first trading day of January – although adjustments will be made for corporate events to “maintain the representativeness and investability of index”.
The aim, says the exchange, is to “further enhance the SSE and CSI index family as well as to provide new analysis tool and underlying instrument for investors”. A new commodities equity index is also being launched.