As investors and regulators step up demands for firms to disclose their climate-related risks, IHS Markit Ltd. has begun producing the first global benchmark for carbon emissions prices.
The firm has announced the launch of its Global Carbon Index, which combines futures markets data with its own proprietary data to produce the first benchmark for global carbon prices.
The new index tracks the performance of the largest, most liquid global carbon markets, including the European Union’s Emission Trading System (EU ETS), California’s cap-and-trade program and the Regional Greenhouse Gas Initiative (RGGI).
“The IHS Markit Global Carbon index creates an important benchmark which helps financial institutions to better assess and price climate-related financial risks,” said Eron Bloomgarden, co-founder of Climate Finance Partners, which helped develop the index.
“We see growing investor interest in carbon credits as an asset class,” he added.
IHS noted that putting a price on carbon emissions with market-based mechanisms, such as cap-and-trade programs, is a key strategy for reducing emissions.
There are now 57 jurisdictions with these kinds of carbon pricing mechanisms, which is up 34% since 2017, IHS reported.