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Level39: 217 really interesting stories to tell #3

Level39: 217 really interesting stories to tell #3

by Fintech TimesMay 18, 2016
Company: ET Index Founder: Sam Gill

Company: ET Index Founder: Sam Gill

Can you explain what it is please, what your company does, I see from your website it relates to carbon credits, is that right?
Not exactly. Carbon credits are allowances that companies are given to pollute under schemes such as the EU Emissions Trading Scheme. If a company has surplus credits they can be sold on the market. Sadly, one of the biggest problems with the EU Emissions Trading Scheme is that companies lobbied very hard for the system to have too many credits, so it doesn’t really do its job of cutting emissions. Luckily other schemes that are popping up all around the world are learning for these early mistakes. ET Index is focused on ranking companies on the carbon emissions they create, and then linking these rankings to a series of stock market indexes. ET Low Carbon and Fossil Free indexes enable investors to track the market. This is the same as an index like the FTSE100, but with ET Indexes they drastically reduce their exposure to carbon risk, all the while sending a signal to the companies in the rankings that they need to lower emissions in order to gain a greater weighting in the index.

How did you start?
The company is a spin-out from a not-for-profit research body that is focused on advancing market mechanisms that help investors tackle climate change.
We received backing from the Climate KIC, the EU’s main climate innovation initiative that accelerates start ups.

When?
2014

What’s the impact of what you’re doing? Why is it important?
The more investors that begin to track Environmental Tracking indexes, the more pressure is placed on companies to lower emissions and increase transparency.
The only way for a company to gain a greater weighting within the index is for it to lower emissions each year. The more investors follow this system, the greater the increase or decrease in demand for company shares becomes linked to company greenhouse gas emissions. This is a mechanism that can link company share price to emissions.

How do you see the future of your sector evolving over the next ten years?
We see an evolution towards greater transparency and the weeding out of ‘greenwash’ in favour of approaches that can have a genuine impact.

Where do you see yourselves in that process?
The bedrock of our approach is open data and transparency. We don’t believe in ‘black box’ models. There is a general shift towards index investing. We see the next shift being towards indexes with impact.


The article was first published on The Fintech Times.

About The Author
Fintech Times
Fintech Times
The Fintech Times is the world’s first and only newspaper dedicated to fintech. Published monthly, The Fintech Times explores the explosive world of financial technology, blending first hand insight, opinion and expertise with observational journalism to provide a balanced and comprehensive perspective of this rapidly evolving industry.