Bloomberg has created a low-carbon index that maintains diversification in physical commodities, the firm announced.
The Bloomberg Commodity (BCOM) Carbon Tilted Index measures carbon emissions and over-weights commodities with a lower carbon footprint. The new index was designed to under-weight commodities with the most greenhouse gas emissions by incorporating data that establishes the greenhouse gas emissions across the life cycle of the commodity, according to Bloomberg.
“The BCOM Carbon Tilted Index is designed with investors’ complex needs in mind. There is a growing want to support the transition to a low-carbon economy while remaining aligned with their investment goals across all asset-classes,” Allison Stone, head of multi-asset product at Bloomberg Index Services Limited, said in a statement.
“Utilizing a foundation of Bloomberg carbon research, this index has been constructed using an innovative methodology that speaks to priorities of sustainability and diversification, while still providing the liquidity that commodities investors commonly seek,” she added.
The new index is the latest extension of the Bloomberg Commodity Index, which was launched in 1998. BCOM provides broad-based exposure to commodities, and no single commodity or commodity sector dominates the index. Rather than being driven by micro-economic events affecting one commodity market or sector, the diversified commodity exposure of BCOM potentially reduces volatility in comparison with non-diversified commodity investments, Bloomberg said.