Shanghai Stock Exchange considers carbon index

The Shanghai Stock Exchange (SSE) has asked regulators to demand that listed companies publicly report their greenhouse gas emissions in a move that could lead to the creation of a national carbon index.

The exchange has urged the China Securities Regulatory Commission (CSRC) to make carbon emission reporting a requirement of listing publicly so that it can set up an environmentally minded benchmark index for companies.

This index would report on how much carbon each company emits plotted against its profit, allowing potential investors to identify investment opportunities that avoid significant fossil fuel risks. It would be particularly welcome, claims the SSE, should China and the rest of the world redouble efforts to cut carbon emissions and combat climate change in the future.

A new report from the exchange’s own Financial Innovation Laboratory, however, concludes that ‘companies are not willing to release carbon emissions data’, predicating the need for mandatory fossil fuel emission reports. Though Shanghai has already introduced a carbon emissions trading scheme that requires local firms to report on any greenhouse gasses produced, the data has yet to be made publicly available.

The CSRC recently announced that it will take several measures to attract more foreign investment into the country’s capital markets. Through a number of changes to policies governing the country’s Qualified Foreign Institutional Investor program, the regulator hopes to expand investment quotas for overseas stakeholders.

‘Against the backdrop of China’s increasing economic strength and a further opening up of its capital markets, there is still very big demand from foreign investors,’ notes Zhang Xiaojun, spokesperson for the CSRC.

The changes come after the SSE’s announcement last week that it would raise the investment cap for foreign stakeholders from 20 percent to 30 percent.